As tax season approaches (now in early April 2025!), it’s a great time for landlords in Florida, and across the US to gather their financial information and consider potential tax deductions. Maximizing these deductions can significantly reduce your tax liability. Here’s a comprehensive list of potential tax deductions to consider for your rental property:

Operating Expenses (Generally Deductible in the Year Incurred):

• Mortgage Interest: This is usually one of the largest deductions. You can deduct the interest portion of your mortgage payments on your rental property. You’ll typically receive Form 1098 from your lender detailing the interest paid.
• Property Taxes: Real estate taxes paid on your rental property are fully deductible. Remember that the $10,000 SALT (State and Local Tax) limit generally applies to taxes on your personal residence, not your business properties like rentals.
• Insurance: Premiums paid for various types of insurance related to your rental property are deductible, including:
  • Fire and hazard insurance
  • Flood insurance
  • Liability insurance (covering injuries on the property)
  • Rent loss insurance (protecting against lost income due to property damage)
• Repairs: Costs to keep your property in good operating condition are deductible. Examples include fixing leaks, painting (for maintenance), repairing broken windows or doors, and appliance repairs. Remember the distinction between repairs and improvements!
• Maintenance: Expenses for regular upkeep of the property, such as:
  • Lawn care and landscaping
  • Cleaning services
  • Pest control
  • Pool and spa maintenance
  • Trash removal
• Utilities: If you pay for utilities for your rental property (and are not reimbursed by your tenants), such as electricity, gas, water, and sewer, these are deductible.
• Advertising: Costs associated with finding tenants, such as online listings, newspaper ads, brochures, and fees paid to rental agencies.
• Property Management Fees: If you hire a property management company to handle tasks like tenant screening, rent collection, and maintenance, their fees are fully deductible.
• Legal and Professional Fees: Fees paid to attorneys, accountants, tax preparers (specifically for work related to your rental property, like Schedule E), and other professional advisors for services directly related to your rental business.
• Travel Expenses: Reasonable and necessary travel expenses incurred to manage your rental property. This could include trips to collect rent, meet with contractors, or handle property issues. You can typically deduct actual car expenses (gas, oil, repairs) or use the standard mileage rate (for 2024, it was 67 cents per mile for business use; the 2025 rate will be released later in the year). Be sure to keep detailed records of your trips.
• Supplies: The cost of small tools and supplies used for maintaining the rental property (e.g., cleaning supplies, light bulbs, small hardware items).
• Home Office Expenses: If you have a dedicated space in your home that you use exclusively and regularly for your rental business (e.g., managing finances, communicating with tenants), you may be able to deduct home office expenses. You can use the actual expense method (allocating a portion of your mortgage interest, property taxes, insurance, utilities, etc.) or the simplified method ($5 per square foot, up to 300 square feet).

Depreciation (Deducted Over the Asset’s Useful Life):

• Residential Rental Property: The cost of the building itself (not the land) is depreciated over 27.5 years using the straight-line method. You’ll need to determine the basis of your property (original cost plus certain improvements, minus any casualty losses).
• Personal Property: Tangible personal property used in your rental, such as appliances (refrigerators, stoves), furniture provided for tenants, and landscaping equipment, is depreciated over shorter periods (typically 5 or 7 years, depending on the asset).
• Land Improvements: Certain improvements to the land, like driveways and fences, are depreciated over 15 years.
• Remember: Land itself is not depreciable.

Other Potential Deductions and Considerations:

• Casualty and Theft Losses: If your rental property suffers damage from a casualty (e.g., fire, storm) or theft, and the loss isn’t fully covered by insurance, you may be able to deduct the loss.
• Qualified Business Income (QBI) Deduction: Depending on your taxable income, you may be able to deduct up to 20% of your qualified business income (QBI) from your rental activities. There are income thresholds and limitations that may apply.
• Passive Activity Losses: Rental activities are generally considered passive. Your ability to deduct losses may be limited to your passive income. However, the special $25,000 rental real estate loss allowance might apply if you actively participate and your modified adjusted gross income (MAGI) is below certain thresholds ($100,000 – $150,000 phase-out).
• Points Paid on Mortgage: Points you paid to obtain the mortgage for your rental property can be deducted over the life of the loan. However, if you paid points to refinance a mortgage, you generally deduct them ratably over the new loan’s term. If you used part of the refinanced mortgage proceeds to improve your rental property, those points related to the improvement portion can be deducted in the year paid.
• Lead Paint Abatement: Costs to remove or cover lead-based paint in your rental property may be deductible.
• Energy-Efficient Commercial Buildings Deduction: While less common for residential rentals, if you made certain energy-efficient improvements to a commercial rental building, you might qualify for this deduction.

Important Reminders for Landlords:

• Distinguish Between Repairs and Improvements: This is crucial. Repairs maintain the property; improvements add value or extend its life and must be capitalized and depreciated.
• Keep Excellent Records: Maintain detailed records of all income and expenses, including receipts, invoices, and bank statements. Digital record-keeping can be very helpful.
• Allocate Expenses: If you use part of your property for personal use, you need to allocate expenses appropriately.
• Understand Passive Activity Rules: Be aware of how these rules might affect your ability to deduct losses.
• Consult a Tax Professional: Given the complexities of tax law, it’s highly recommended to consult with a qualified tax advisor or CPA. They can provide personalized guidance based on your specific situation and ensure you’re taking all eligible deductions while complying with IRS regulations. They can also help you navigate any changes in tax laws for the 2025 tax year.

By carefully considering these potential deductions and maintaining thorough records, you can help minimize your tax burden as a landlord during this tax season. Remember that tax laws can change, so staying informed or working with a tax professional is always a good strategy.