Deductable Rental Property Expenses, part 2

If you are leasing property for revenue, it is very important for you to make sure that a number of expenses and services are adequately set up and recorded for tax uses. Why don’t we discuss these expenditures.


Insurance coverage payments are pre-paid prior to the given time frame. Illustration: You purchased insurance on the rental property in March 2012 for $1200. April 2012 to March 31, 2013 will be the policy period of this plan. Since the protection timeframe does extend past the current tax year, you should allocate the payments pertinent to the present tax year only and bring forward the balance for the following filing year. This means that $900 (9 months April to Dec 2012) or $100 per month of qualified rental use could be the tax deductible insurance premium.

Business and personal customers will often receive a discount rate if their insurer is willing to combine their insurance premium products. Only the business rental property pertinent part may be deductible. The private and non-business related use might be tax deductible with your individual income tax return. Lastly, Title Insurance is not applicable as an expense and must be part of the Cost Basis of the rental property.

Cleaning and Maintenance

When it is applied to continuous cleanliness and upkeep of common spaces, then regular upkeep of the rental property can be an allowed expenditure. These kinds of costs are confined to the hours which have been permitted leasing hours but not personal use days. Several rental property owners have long term contracts with local professional services to maintain the rental property on a regular basis to be sure it’s in running and functional order. This might include such expert services as window cleaning, dusting furniture, appliance cleaning and repairs. Only these types of professional services are permitted, any sort of major structural improvements or modifications have to be allocated to the Cost Basis of the property.


Every so often, there will probably be some kind of need to mend an appliance, touch up a little repainting, or some task that will not demand a major renovation of the property framework. In accordance with the rental duration, you can deduct these kinds of required and common expenditures.

Don’t include any kind of times which would be looked at to be individual use times, because expenses are only allowable in relation to the earnings of the property. Only those expenses that are directly related to the authorized leasing timeframe are allowed.

  • On the IRS’s site, you’ll find the the reports you need. If you need more information, look at IRS Publication 527.

Seattle 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.

Seattle CPAsAbout Seattle CPAs
Seattle CPA+John Huddleston has written extensively on tax related subjects of interest to small business owners. Since 2002, he has been the owner of his own small business, Huddleston Tax CPAs. He is a graduate of Washington State University and the University of Washington School of Law.

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