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10 Rental Property Deductions for Landlords

Many California landlords pay more than they should in taxes, simply because they overlook some of the most important deductions. This is a major mistake, since optimizing your taxes can often mean the difference between a profit and a loss. 

Understanding your opportunities and planning ahead can help put you in the best possible position when tax time rolls around. Here is a look at the top 10 deductions for rental property owners in California.

1. Depreciation

When you purchase a rental property, you are allowed to deduct a portion of the building value (not the land) each year. The IRS says that rental property has a “productive lifespan” of 27.5 years, so they allow you to take a depreciation deduction for the loss in value you will experience each year. The productive lifespan of commercial properties is less favorable at 39 years – but can still be very significant in lowering your income tax liabilities. 

It is also possible to further increase this deduction by using a technique called “component depreciation” whereby you can depreciate building components that have a shorter lifespan over fewer years. 

2. Interest

Unlike interest paid on a loan for a personal residence, you can write off the full amount of interest you pay on your rental property mortgages and on any property improvement loans. If you use a credit card to purchase products and services for your rental properties, you can write off that interest as well. 

3. Insurance 

Most landlords carry theft, fire, and flood insurance on their rental properties. You can take a deduction for these expenses, as well as for your landlord liability insurance policy. If you have employees, you can also deduct the amount you pay for their worker’s compensation and health insurance coverage.

4. Repairs 

No matter how well you take care of a rental property, there will be times when they need repairs. The good news is you can take a full deduction for the cost of repairs, as long as they are “ordinary, necessary, and reasonable in amount.” This is a great way to improve your property while also getting a tax-break. 

Some examples of deductible repairs include fixing the plumbing, making electrical repairs, repainting, replacing broken windows, and fixing floors. 

Note that the cost of repairs can be fully deducted against income earned during the year when the repair was completed. 

Improvements in a property that enhance the property’s value e.g., expanding the building can also provide a write-off but, unlike repairs, are generally deducted over the useful life of the improvement similar to how depreciation is handled.  

5. Home Office

Many landlords do not realize they may qualify for a home office deduction. As long as your space meets the IRS requirements that you use it to primarily conduct your rental property activities, you may be eligible to take a tax write off. This applies both to spaces devoted to office work and any workshops or other spaces you use for your rental activities. 

6. Travel 

Landlords are allowed to deduct certain travel expenses that are business related. This generally does not include commuting expenses, meaning traveling from your home to your place of business or rental – unless you have a home office which is primarily used by you to conduct rental property related business. 

Travel expenses related to overseeing remote rental properties including accommodations can also be written off. Some investors may invest in properties near relatives, friends or a favorite vacation area and take advantage of writing off the business-related portion of trips to those areas. 

7. Personal Property

Items like appliances, furniture, and even gardening equipment can be written off as “personal property” if they are used for rental activity. For personal property that costs $2,000 or less, you can write the entire cost off in a single year using the de minimis safe harbor deduction. Until 2022, you can also take a 100% bonus depreciation. (you should explain the 100% bonus depreciation)

8. Pass-Through Tax Deduction

The Tax Cuts and Jobs Act* provided for a new pass-through tax deduction that benefits landlords. Depending on your income, you may either be able to deduct 20% of your net rental income or 2.5% of the initial cost of your rental property, plus 25% of the amount you pay your employees. Unless there’s a change, this deduction will expire in 2025. This deduction is phased out for landlords having higher incomes. 

9. Legal and Professional Services

When you hire professionals to help you with your rental properties, you can take a deduction for these expenses. This includes attorneys, real estate investment advisors, accountants, and property management companies. 

10. Employees and Independent Contractors 

If you have employees or hire independent contractors, you can take a deduction for the wages you pay them. This would apply, for example, if you hire a full-time or part-time property manager or hire a professional to do repairs on your investment property.  


Real estate investors have a wide range of deductions that can legitimately be used to reduce their taxable income. Many of our clients are able to shelter as much as 100% of their real estate related income using only the deductions described in this article. 

Please be sure to discuss the applicability of any of these deductions (as well as others) with a knowledgeable real estate tax advisor to verify how they may apply to your personal situation. You may be pleasantly surprised at how much you can save by taking full advantage of available deductions. 

Tired of Being a Landlord? Explore Your Options! 

There are many advantages to owning investment properties. However, being a hands-on landlord can be exhausting. If you’re ready for a change, a 1031 exchange into properties that are fully managed such as a Delaware Statutory Trust could be a good solution for you. 

The professionals here at First Guardian Group help investors trade their current property holdings for other options that can be less labor-intensive. If you want to learn more about how a 1031 exchange can help you, give us a call us today at 866-398-1031. You can also schedule a personal consultation with Paul Getty here.

Please feel free to download our FREE ebook to learn more about real estate tax deferral strategies!

Help Save 1031 Exchanges
Write to your Member of Congress and Senators urging them to oppose restricting Section 1031 like-kind exchanges. As part of the American Families Plan, the Biden Administration has proposed eliminating the application of Section 1031 for gains greater than $500,000. Like-kind exchanges have been part of the U.S. tax code since 1921 and are one of the tax code’s most powerful economic tools. It is critical that we all vigorously and visibly oppose this proposal. Make your voice heard with a pre-filled letter, which you can customize to add personal anecdotes or powerful client stories to highlight the positive impact of Section 1031 like-kind exchanges. Take action today by clicking HERE.

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*The Tax Cuts and Jobs Act of 2017 allows real estate investors to fully write-off the cost of select new and used equipment, furniture, fixtures, and most land improvements in the year when the investment was made rather than requiring that the improvements be depreciated over time. This can be a powerful tool for lowering taxable income. Please consult your tax advisor to learn how you may benefit.

Paul Getty

Paul Getty is a licensed real estate broker in the state of California and Texas and has been directly involved in commercial transactions totaling over $3 billion on assets throughout the United States. His experience spans all major asset classes including retail, office, multifamily, and student, and senior housing. Paul’s transaction experience includes buy and sell side representation, sourcing and structuring of debt and equity, workouts, and asset and property management. He has worked closely with nationally prominent real estate brokerage and investment organizations including Marcus Millichap, CB Richard Ellis, JP Morgan, and Morgan Stanley among others on the firm’s numerous transactions. Paul also maintains a broad network of active buyers and sellers of commercial real estate including lenders, institutions, family office managers, and high net worth individuals. Prior to founding First Guardian Group/FGG1031, Paul was a founder and CEO of Venture Navigation, a boutique investment banking firm specializing in structuring equity investments made by institutions and high net worth individuals. He possesses over 35 years of comprehensive worldwide business management experience in environments ranging from early phase start-ups to multi-billion-dollar corporations. His track record includes participation in IPOs and successful M&A activity that has resulted in investor returns of over $700M. Paul holds an MBA in Finance from the University of Michigan, graduating with honors, and a Bachelor’s Degree in Chemistry from Wayne State University. Paul Getty holds Series 22, 62, and 63 securities licenses and is a registered financial representative with LightPath Capital Inc, member FINRA /SIPC. Paul is a noted speaker, author, and actively lectures on investments, sales, and management related topics. He is author of The 12 Magic Slides, Regulation A+: How the JOBS Act Creates Opportunities for Entrepreneurs and Investors, and Tax Deferral Strategies Utilizing the Delaware Statutory Trust (DST), available on Amazon and other retail outlets.

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