Checklist for Rental Deductions

Checklist for Rental Deductions

The following expenses are deductible from rental income on Schedule E of Form 1040

  1. Real Estate taxes paid on your rental property

  2. Construction period interest and taxes: typically these need to be depreciated and capitalized

  3. Depreciation of the building being rented. Land value is not subject to depreciation. You begin to calculate from the month you begin to rent the property or take ownership with the intent to rent.

  4. Furniture, appliances, carpeting, are 5 year property for the purpose of depreciation.  Furniture in office buildings are considered 7 year property

  5. Management fees and fees incurred for someone to collect rents

  6. Maintenance expenses including heating repairs, lighting, water, utilities, heating oil etc

  7. Salaries and wages: payments to superintendents, janitors, elevator operators, and other maintenance personnel

  8. Traveling expenses to look after property: You must demonstrate the purpose of the trip was specifically for the business of owning the property and not a vacation

  9. Legal expenses for evicting tenants or writing leases

  10. Interest paid on mortgages and other debt related to the property

  11. Commissions paid to find tenants and collect rentals

  12. Premiums for property insurance, fire insurance, liability insurance etc

  13. Tax preparation cost for the preparation of schedule E and related depreciation forms

  14. If you rent your property to a friend or relative for less than the fair market rental value, you may deduct expenses and depreciation only to the extent of the rental income

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