Are property management fees and leasing commissions deductible?
Yes. Publication 527 lists commissions and management fees among common rental expenses, and Schedule E has a line for each: line 8 for commissions and line 11 for management fees. Commissions you pay to buy a property are different: they become part of its basis instead.
Where each fee goes
On Schedule E, line 8 is Commissions and line 11 is Management fees. A fee the property manager takes as a percentage of rent is a management fee. A fee to find a tenant for a vacant unit is generally a commission. Many managers charge both, so ask for an invoice or statement that lists them separately.
| Charge from a manager | Usual line |
|---|---|
| Monthly percentage of rent | Line 11, Management fees |
| Fee for finding a new tenant | Line 8, Commissions |
| Repair they arranged and passed through | Line 14, Repairs (or improvement) |
| Eviction filing fee they advanced | Line 10, Legal and professional fees |
Commissions to buy are different
Publication 527 says that when you buy a property and agree to pay the seller's sales commission, that amount is part of your basis. It is not a Schedule E commission. Only the commissions you pay in running the rental are current expenses.
Reading the manager's statement
A manager's monthly statement mixes rent collected, fees, repairs and your payout. Record each part separately, not just the payout, or your income will be understated by the fees. The rent collected is your income; the fees are expenses.
Example a made-up manager collects $8,000 in rent, keeps an 8% management fee of $640, pays $500 for repairs and sends the owner $6,860. Your books show $8,000 income, $640 management fees and $500 repairs. The deposit of $6,860 is only what is left after $8,000 - $640 - $500.
If you pay a manager that is an individual or an unincorporated business, ask your preparer whether a 1099 applies, and see 1099 NEC for rental contractors.
When you manage the property yourself
If you manage your own rentals, you have no management fee to deduct, and you cannot deduct a fee to yourself. A fee you pay your own LLC for management raises separate questions about how the LLC reports it, so do not set one up for the deduction alone. If you pay an outside bookkeeper or leasing agent for a task, those are real costs and go on the matching line.
- Hourly help for showings: line 8 if it is a commission, or the line that matches the service.
- A flat fee for a lease renewal: ask the manager to show it as a separate line item.
- A manager who also does repairs: record the repair costs on line 14 and keep the invoices.
- Fees that the tenant pays directly to the manager are not your expense.
Compare your manager's statement with your bank deposits each month, so you notice a missing payment or a fee that changed. Our guide to self-managing versus hiring a manager shows how to price the choice.
Questions to bring to your tax preparer
- Which charges on my manager's statement are fees and which are pass-through costs?
- Do I need to issue a 1099 to my manager or my leasing agent?
- Is the fee my manager charged for a lease renewal a commission or a management fee?
- How do I treat the commission I agreed to pay when I bought the property?
- Are any of my manager's charges capital costs?
How DoorKeeping handles it
DoorKeeping reads a statement or invoice and codes each part to its Schedule E line, with your approval before anything is posted. DoorKeeping gives no tax advice. Your tax preparer decides how a rule applies to you, and your state may add its own rules.
Sources
- IRS, Publication 527, Residential Rental Property, read Oct 30, 2026
- IRS, Instructions for Schedule E (Form 1040), 2025, read Oct 30, 2026
Questions
- What line are management fees on Schedule E?
- Line 11, Management fees. Commissions are on line 8.
- Can I deduct a commission I paid when I bought the property?
- Publication 527 says a seller commission you agree to pay is part of your basis, not a current expense.
- Should I book only the payout from my manager?
- No. Book the rent collected as income and each fee as an expense, so the books match the return.