One of the most attractive and overlooked rewards of real estate investing is that there are a great many tax benefits offered to landlords and real estate investors. While the following list is in no way exhaustive, it should give you a foundation on which you can work with an accountant specializing in real estate to minimize your dues to Uncle Sam’s greedy paws.  



Landlord Tax Deduction: Some Settlement Charges

A primary concern for would-be real estate investors is the up-front cost of investing in real estate. The good news, however, is that most of these charges are tax-deductible, ranging from lender fees to pro-rated property taxes to water bills to transfer taxes to hazard insurance premiums and many others.  

Landlord Tax Deduction: Mortgage Interest
As little fun as it is to pay mortgage interest, this interest is 100% tax-deductible, and it adds up to a substantial sum for most landlords.  

Landlord Tax Deduction: Advertising & Tenant Screening
Every penny you spend on advertising for new tenants, and screening those rental applications, can be deducted from your taxes.  

Landlord Tax Deduction: Hazard Insurance
This is a boon denied to homeowners, so take advantage of it. Annual hazard insurance premiums on investment properties can be deducted, so be sure to send your accountant a copy of the premium due notice.  

Landlord Tax Deduction: Maintenance & Repairs
Any repairs made to keep the rental property habitable are considered tax deductible (such as replacing a bad roof). However, other improvements that are made solely to improve the value of the property are not considered tax deductible (such as installing a hot tub).  

Landlord Tax Deduction: Landlord Forms & Legal Services (Non-Eviction)
Landlord forms, such as lease agreements, can be deducted, as can the cost of legal fees charged in reference to your rental properties. One exception is eviction costs, however.  

Landlord Tax Deduction: Property Management Costs
If you pay a property manager to handle your rental properties, their fees are tax deductible.  

Landlord Tax Deduction: Depreciation
Yet another benefit that landlords enjoy and homeowners do not, landlords can deduct the theoretical loss in value of their investment property, as if it depreciated from full value to zero over the course of 27.5 years.  

Landlord Tax Deduction: Accounting Costs
Despite the frustration of having to pay an accountant or real estate attorney each year just to calculate what you owe Uncle Sam, the good news is that the money spent on all those forms and calculations can be deducted from your tax return.  

Landlord Tax Deduction: Private Mortgage Insurance and Property Taxes
Your annual real estate taxes are tax deductible, and if your mortgage lender requires you pay private mortgage insurance (PMI), these charges are deductible as well.  

For any risk associated with investing in real estate, landlords can reduce these losses by deducting it from their taxable income, and thus only losing a fraction of what the actual cost was. Consult an account who specializes in real estate investing, and take advantage of these and other tax advantages for landlords!

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