Part 1: Tax Deducible Rental Property Expenses

This article from the Rental Property Tax Guide focuses on the different types of expenses that you may deduct from your gross rental income in order to figure net rental income. Because there is a variety deductible expenses, this guide divides the topic into four different variations. This first post will look at advertising, interest and professional fee expenses.


If you’re renting a room in your home, or if it is a duplex and you’re occupying the other unit, you will need to pro rate the mortgage expense. (See the article titled Personal Use of Rental Property, included in this guide, for more on how to calculate personal use). Now if you are renting the property as its own living unit, you can deduct all of the mortgage interest you paid on Schedule E. Also, if you own only a part interest in the rental, you must multiply the total amount of mortgage interest paid on the property by your ownership interest. Be aware, however, that certain expenses you pay to obtain a mortgage (such as title/recording fees and commissions) are capitalized as part of your depreciable basis for the property, and are not expensed. See the article titled Depreciation Expenses for Rental Property, included in this Guide, for more on depreciation expense. Other types of interest may also be deductible, if you incurred the interest solely for the benefit of the rental property.


Promoting your rental property on the open market, through marketing efforts such as posting newspaper ads or paying for internet marketing, is a tax deductible expense.

Professional fees

If you pay a legal counsel to set up a rental agreement or initiate legal actions for you to evict a tenant, you are able to deduct these charges. Additionally you can deduct fees paid to an accountant or CPA for prepping the Schedule E of your return from the previous year. Be sure to pro rate the overall fee between the rest of your return versus the Schedule E portion of you return based on time spent. Any fees unrelated to the Schedule E appear on Schedule A as personal tax preparation expenses. Also any commissions or management fees to professional realty groups for managing the property are deductible as well.

Seattle Accountant has written prolifically on accounting and other tax related subjects concerning small business owners. He is a graduate of Washington State University and the University of Washington School of Law.

Kirkland CPAAbout Kirkland CPA
Kirkland CPA+John Huddleston has written extensively on tax related subjects of interest to small business owners. He is a graduate of Washington State University and the University of Washington School of Law.

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