Tax for Rental Property Owners: Depreciation, Deductions & the Mistakes That Cost You

Rental real estate is one of the most tax-advantaged things you can own — but only if the return is built right. Most landlords miss the biggest lever of all. (If you're a real estate agent, your income is a Schedule C instead — we handle that too.)

Depreciation: the deduction landlords underuse

You can depreciate the building (not the land) over 27.5 years — a paper deduction that shelters real rental income every year. Miss it and you overpay; worse, the IRS can still hit you with depreciation recapture later whether you claimed it or not. Get it set up correctly from year one.

Deductions on Schedule E to capture

• Mortgage interest, property taxes, and insurance.

• Repairs and maintenance (deduct now) vs. improvements (depreciate) — the line matters.

• Property management, leasing, and professional fees.

• Utilities you pay, HOA dues, and supplies.

• Travel and mileage to manage the property.

• Depreciation on appliances and improvements (often via Section 179 or bonus where eligible).

Passive losses, QBI, and the pro question

Rental losses are generally passive — limited unless you qualify (for example, the $25,000 active-participation allowance, or real-estate-professional status). Many rentals also qualify for the 20% QBI deduction. These rules are where money is won or lost.

What to do next

1. Send us your closing statement, mortgage 1098, and a year of income and expenses.

2. We confirm depreciation is set up right — and fix it if it isn't.

3. We map passive-loss and QBI treatment to your situation.

That's exactly what we do — free — in a 15-minute review. All State Tax Resolution is Enrolled-Agent prepared and a QuickBooks Platinum ProAdvisor.

Get your free review: fill out the quick form on our site, or call or text (323) 900-0305. We mail a rental organizer to every rental client.

Informational only, not individualized tax advice; your situation may differ.

Ready to see your number? Book your free 15-minute review or run the free Tax-Savings Calculator — no obligation.