Optimizing your Rental Properties
Whether you’re renting out a single unit or managing a portfolio of rental properties, understanding the available deductions is essential for maximizing your tax savings. Here are key points to consider:
- Depreciation
You can depreciate your residential rental property over 27.5 years. This depreciation can significantly reduce your taxable income, so don’t overlook it—failure to claim depreciation could lead to long-term penalties. - Mortgage Interest and Real Estate Taxes
Both mortgage interest and real estate taxes are deductible expenses. However, note that expenses incurred to obtain a mortgage are not deductible; instead, they will increase your property’s basis. - Rental Losses for Real Estate Professionals
If you’re a real estate agent or a full-time real estate professional, you may offset your ordinary income with losses from rental properties. This benefit may not apply if your primary job is unrelated to real estate. Contact us to learn more about your eligibility for deductions. - Repair Costs
You can fully deduct repair costs as long as they are not significant. For larger expenses, you’ll need to capitalize the cost and depreciate it over the asset’s useful life.

- Limited Liability Company (LLC)
Establishing an LLC for your rental property can help limit personal liability and keep your business and personal expenses separate. - Qualified Business Income Deduction
Rental income may qualify for the 20% Qualified Business Income deduction, which can further reduce your taxable income. - State and Local Taxes
Be aware that you may be responsible for state and local tangible property taxes in some jurisdictions. Contact us for detailed information specific to your area.
Need Expert Guidance?
For personalized tax strategies tailored to landlords, reach out to us at taxinfo@MaxTaxj.com. At MaxTax, we specialize in rental properties, drawing on both personal and professional experience, as our clients and our team also own rental income properties. Let us help you navigate the complexities of rental property taxation and maximize your deductions!