Rental property tax deductions: a checklist from IRS Publication 527

The basic rule for deducting rental costs

Publication 527 says that in most cases the expenses of renting your property, such as maintenance, insurance, taxes and interest, can be deducted from your rental income. If you use the cash method, which most small landlords do, you generally deduct an expense in the year you pay it. If you use the accrual method, the IRS points you to Publication 538.

If you own only part of a property, you deduct your share. Publication 527 gives the example of an owner of a one-half undivided interest who paid $968 for repairs and deducts $484. If you also use the property yourself, you divide the expenses between rental and personal use, and your deductions may be limited. That is covered in chapters 4 and 5 of Publication 527.

The checklist, line by line

The first column follows the expense lines printed on Schedule E. The third column is the heading to look for in Publication 527 (chapter 1 unless noted).

Several of these have their own guides: mileage and local travel, the home office, depreciation of appliances and carpet, the de minimis safe harbor for small purchases, property taxes and the SALT cap, and what happens to rent a tenant never paid.

Deductions landlords often forget

Publication 527 lists several that are easy to miss.

• Tax preparation fees for the rental. You can deduct fees you paid to prepare Part I of Schedule E, including fees paid in 2025 to prepare your 2024 Schedule E. You can also deduct what you paid to resolve a tax underpayment related to the rental, other than federal taxes and penalties.
• Expenses before the first tenant. You can deduct ordinary and necessary expenses for managing, conserving or maintaining the property from the time you make it available for rent.
• Expenses while a unit sits empty. You may deduct the ordinary and necessary costs, including depreciation, of managing, conserving or maintaining a vacant rental. You cannot deduct the rent you did not collect.
• Expenses while listed for sale. You can deduct them until the property is sold, but only if it is still held out and available for rent.
• Trips whose main purpose is the rental. The cost of traveling away from home counts if the primary purpose is to collect rent or to manage, conserve or maintain the property. It does not count if the main purpose is to improve the property.

What is not deductible, or not deductible yet

• Loan principal. Only the interest on a mortgage is an expense.
• Improvements. Publication 527 says you must capitalize any expense that betters, restores or adapts the property to a new use. These are recovered through depreciation, not deducted at once. See the roof replacement election for one way a replaced part is handled.
• Costs of getting a mortgage, such as mortgage commissions, abstract fees and recording fees. The IRS treats these as capital expenses that are part of your basis, not as interest.
• Local benefit charges that raise the value of the property, such as new streets, sidewalks or sewers. They are added to basis. Charges for maintaining or repairing those benefits, or for interest on them, are deductible.
• Rent you never collected, if you use the cash method. You never counted it as income, so there is nothing to deduct.
• Your commute. Travel between your home and the rental is generally nondeductible commuting unless your home is your principal place of business.

A worked example

Example a made-up 8 unit building collects $96,000 of rent in the year. Its expenses are advertising $600, 1,200 miles of local driving at 70 cents a mile ($840, the Publication 527 rate for 2025; the IRS sets the rate each year), cleaning and maintenance $4,200, insurance $3,900, professional fees $1,250, mortgage interest $21,400, repairs $5,800, supplies $640, property taxes $8,900, utilities $6,100 and depreciation $19,000. Those add up to $72,630, so the net rental income is $96,000 minus $72,630, which is $23,370. The owner also paid $14,000 of mortgage principal and spent $11,000 on a new roof. Neither is in the $72,630: the principal is not an expense, and the roof is an improvement that is depreciated over time. Your preparer decides the final treatment of each item.

The lesson for your books: the improvement and the principal each need their own account, so the repair and interest totals stay clean. The chart of accounts guide shows a numbered list that keeps them apart.

Keep the proof

A deduction you cannot document is a deduction at risk. Keep the invoice, the proof of payment and a line saying which property it was for. For vehicle expenses the IRS requires records that follow the rules in chapter 5 of Publication 463, and you attach Form 4562, Part V. How long to keep everything is in our records guide.

How DoorKeeping handles it

In DoorKeeping each property's LLC has its own books, and expense accounts map to Schedule E lines, so a repair, a utility bill and an insurance payment land on the right line as they are recorded. Bills are read and coded by AI with the invoice attached, and the Schedule E report comes from the books. DoorKeeping costs $2 per unit per month with no other fees, and it does not give tax advice, so confirm each treatment with your tax preparer.

Sources

1. IRS, Publication 527, Residential Rental Property (2025), read Oct 30, 2026
2. IRS, Instructions for Schedule E (Form 1040), read Oct 30, 2026
3. IRS, Publication 538, Accounting Periods and Methods, read Oct 30, 2026

Questions

Can I deduct my mortgage payment on a rental?

Only the interest part. The principal part is not an expense. Interest paid to a bank goes on Schedule E line 12.

Can I deduct expenses on a rental that has no tenant?

Often yes. Publication 527 allows the ordinary and necessary costs of managing, conserving or maintaining a vacant rental that is held for rent, but not the rent you lost.

Is a new roof a repair?

Usually it is an improvement, which is capitalized and depreciated. Patching a leak is a repair. Your tax preparer makes the final call.