9 Rental Property Tax Deductions You Can Claim in 2026

With rising interest rates and tax law updates for 2026, it’s more important than ever for rental property owners to understand which deductions they're eligible for to reduce their overall tax liability. Strategic deduction selection when renting property can also significantly impact cash flow and your return on investment.

If you own and manage a rental property or are nurturing a growing portfolio, you’re familiar with maintenance expenses and unexpected repairs that add up quickly. Knowing which rental property expenses to claim as tax season approaches can be a challenge, but we’re here to help. Use this guide to learn more about the tax benefits of rental property management and possible deductions you can claim for 2026.

What is a rental property tax deduction, and how can I claim one?

A rental tax deduction is a qualified expense related to its: 

• Operation

• Repair

• Management

A rental property deduction reduces the amount of income subject to taxation at the state and federal levels, and can apply to both residential and commercial rentals. It's essential to take every deduction your rental property qualifies for, as they will lower your overall tax bill.

Report deductible rental expenses and income on Schedule E (Form 1040), Supplemental Income and Loss. 

9 Key Rental Property Tax Deductions 2026

While not exhaustive, this list will give you a good starting point for what expenses you should review. 

1. Maintenance and Repairs

Small business owners can deduct expenses paid for regular repair and maintenance. As long as it’s clearly necessary maintenance, you can deduct the cost of those repairs from your gross rental income. 

It’s a landlord’s responsibility to maintain their property and keep everything in good order, so you shouldn’t hesitate to claim those costs on your tax return. But while repair costs are deductible, improvements to your facility are non-deductible. While the line may seem blurry, the main difference between these expense types is whether they maintain the property's current condition or add significant value.

For example, repainting a property is considered routine maintenance and is deductible, while a floor replacement is considered a non-deductible capital investment.  

You're responsible for keeping careful records of these expenses. The IRS heavily scrutinizes unusually large repair expenses or seemingly unnecessary costs, so your records will be the first defense in the event of an audit.  

2. Rental Property Depreciation

You may not be able to deduct the cost of improvements you make to your properties; however, you can still recollect some costs of those investments over time by reporting depreciation. Review these depreciation timelines: 

• 27.5 years for residential rental property

• 39 years for commercial rental property

It’s not ideal, but at times your investment property will go down in value. If your rental property decreases in value, remember to report this loss on your tax return. 

Depreciation allows you to deduct the costs over the property’s life, provided you meet the following requirements:

• You own the rental property. 

• The property is part of an income-producing activity. 

• You expect the property to last more than a year.

• The property was not utilized and was then disposed of in the same year. 

• The property has a determinable useful life. 

The passage of the One Big Beautiful Bill (OBBB) Act in 2025 permanently restored 100% bonus depreciation. 

3. Mortgage Interest

You can deduct mortgage interest as a rental business expense for your property. The new limit is $750,000 for single and joint filers. In addition to mortgage interest, HELOC interest for property improvements still qualifies as a deductible expense.

You’ll need to fill out Schedule E on your tax return with the information on IRS Form 1098, Mortgage Interest Statement. Your lender will send you Form 1098 each year to show how much you paid in mortgage interest for the year. You can deduct the money you spend paying off the interest on your mortgage from your income. However, this does not apply to cash used to pay back the principal of the mortgage itself. 

4. Property Taxes

Paying property taxes on your properties counts as part of your everyday business costs, and paying rental property tax is a business expense. Therefore, you can deduct it from your total taxable rental income.

The OBBB Act increased the SALT deduction cap from $10,000 to $40,000 for incomes under $500,000 annually.

5. Travel and Transport

You cannot deduct driving to and from your office on your taxes. However, you may be able to deduct travel expenses and other transportation costs incurred for business purposes. 

Deductible expenses include travel costs for visiting properties and making repairs. You can also deduct transport and lodging expenses for overnight travel away from home when you have an apparent business reason for travel. 

You must keep comprehensive records of these costs to claim them correctly on your tax return. Modern mileage logs and apps can capture each trip with ease. The 2025 standard mileage rate is 70 cents per mile, with the IRS expected to announce an annual increase, likely by a few cents, in December 2025.

Note that business use of your personal vehicle can also be claimed and deducted. However, personal expenses aren't deductible or considered qualified rental expenses.

6. Professional or Legal Fees

All of your necessary professional and legal expenses are deductible as well. This includes:

• Membership fees in a professional association

• Subscriptions to any professional renter publications

• Virtual accounting, legal, and property management, and other professional services 

Deductible legal fees include notary costs and attorney consultations. If you hire an attorney for a business-related purpose, then those fees also count as business expenses. 

Utilizing 1-800Accountant's services, with real estate accountants or CPAs who specialize in this area, to assist with your rental property taxes, also qualifies as a deductible expense. 

7. Utilities

If you pay for utilities on a property yourself instead of passing them on to a renter, those payments qualify as deductible business expenses. In this scenario, only owner-paid utilities qualify, not reimbursed ones.

You can deduct utility costs for rental properties and your office.  

8. Operating Expenses  

Most of your everyday costs of doing business may also be eligible tax deductions that you can claim on your federal income tax return. Here are just a few of the business costs that may fall into this category: 

• Employee costs: wages and employment taxes

• Insurance premiums

• Office supplies

• Insurance 

• Software 

• Marketing 

• Office supplies

• Technology expenses: internet and business software

• Office space rent and utilities 

You can deduct certain materials, repairs, and maintenance as long as they keep your property working effectively. Expenses for improvement purposes are not deductible, while certain “home office” costs can apply if you're managing properties from home.

This may be a tricky category, so it’s best to consult with a tax professional to make sure your deductions are acceptable.

9. Necessary Expenses 

Other ordinary and necessary expenses are an umbrella term that includes:

• Insurance

• Marketing

• Advertising

• Education (real estate courses) 

• Continuing education fees

The IRS states that these expenses are to be considered appropriate for the rental property industry.

What’s Not Deductible

While this blog has detailed a list of deductible property rental expenses that you should consider, some items are non-deductible:

• Major renovations and capital improvements

• Personal-use portion of vacation properties

• Commuting expenses

Pro tip: Depreciation (provides cash flow and a reduction in tax liability) and improvements (adding value to the property) interact to create a powerful long-term tax savings strategy. 

Recordkeeping Tips for Landlords

It's essential to retain pertinent supporting documentation related to your rental property if you intend to take landlord tax deductions. Keep the following for at least three years: 

• Receipts

• Invoices

• Digital backups

Note that if you paid independent contractors, other nonemployee real estate professionals, or incurred other nonemployee labor costs, the IRS Form 1099-NEC, Nonemployee Compensation, threshold has increased to $2000 in 2026. While real estate investor tax tips can help, when in doubt about your rental property records, turn to 1-800Accountant's tax-deductible, full-service bookkeeping solution. 

FAQs

Can I deduct property management fees?

Yes, you can deduct property management fees. These fees are fully deductible as operating expenses.

Can I write off a home office for managing rentals?

Yes, it's possible to write off a home office for managing your rentals. It qualifies if it's a dedicated space used exclusively for managing rental activities. It's essential to understand all eligible rental property write-offs and Schedule E deductions.

What’s the difference between a repair and an improvement?

While repairs and improvements may seem similar, they are distinct from an IRS standpoint. Repairs maintain functionality (deductible), while improvements increase value (capitalized).

Do short-term rentals qualify for these deductions?

Generally, yes, short-term rentals qualify for deductions. However, different reporting rules may apply if you provide substantial services. It's important to always report rental income.

Do I have to depreciate land?

Land is not considered to be depreciable. However, buildings and improvements are actual expenses that can be depreciated.

Work with an Expert CPA to Maximize Your Rental Property Tax Savings

As a rental property owner, it's essential to consider every detail when filing taxes. An important component of this obligation is reviewing all expenses and payment types to ensure every eligible deduction is claimed, thereby lowering your overall tax liability. However, minimizing your tax bill can be difficult without expert support.

From maximizing deductions to navigating new 2026 tax laws, 1-800Accountant, America's leading virtual accounting firm, has you covered. Our team of real estate CPAs, EAs, bookkeepers, and tax professionals helps you save thousands annually while maintaining compliance across your rental portfolio.

Schedule a free consultation today to see how much you could save.