What can landlords deduct on Schedule E?

Landlords can deduct mortgage interest, property taxes, insurance, management fees, repairs, travel to the property, utilities paid by the owner, and depreciation of the building structure.

What is the difference between a repair and an improvement?

A repair keeps the property in good working condition (e.g., fixing a leak) and is deductible immediately. An improvement adds value or extends the property's life (e.g., a new roof) and must be depreciated over several years.

How does depreciation work for rental properties?

Residential rental property is depreciated over 27.5 years. This allows you to deduct a portion of the building's cost (excluding land) every year, lowering your taxable income even if the property value goes up.

The Landlord's Tax Portal:
Schedule E & Depreciation

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The Power of Depreciation

Depreciation is a "phantom expense." It lowers your taxable income without you spending cash today. It is mandatory, not optional.

The Golden Rule: You cannot deduct the cost of buying a house all at once. You must spread it over 27.5 years (Residential) or 39 years (Commercial).

⚠️ The "Land Value" Trap: You can never depreciate Land. If you depreciate 100% of the purchase price, you are inviting an IRS audit. We calculate the correct Land/Building ratio for you.

📉 Depreciation Calculator

Estimate your annual "paper loss" deduction.

Purchase Price ($)

Land Value Estimate (%) *Typically 15-25% depending on location.

Repair vs. Improvement?

This is the #1 audit trap. Use this interactive logic tool to decide if you can deduct the expense NOW (Repair) or if you must depreciate it LATER (Improvement).

What did you do to the property?

🛠️

Maintained Condition
(Fixing leaks, painting, patching)

🏗️

Added Value / New Life
(New roof, HVAC, addition)

The "Airbnb Loophole"

Short-Term Rentals (Average stay < 7 days) are NOT considered "Rental Activities" under IRC Section 469.

This means if you "Materially Participate" (manage it yourself), you may be able to use Airbnb losses to offset your W-2 income, bypassing the passive loss rules.

👉 Ask us if you qualify for STR tax status

Strategy Checklist:

✅ Average stay must be 7 days or less.
✅ You must work 100+ hours on the property.
✅ You must do more work than any other person (cleaners included).
❌ Warning: Requires detailed time logs.

The Landlord's Write-Off List

Are you missing any of these Schedule E deductions?

💰 Mortgage Interest

Usually the biggest deduction. Principal is NOT deductible.

✈️ Travel

Checking on property, collecting rent, overseeing repairs.

🛡️ Insurance

Hazard, Flood, Liability, and Loss of Rents insurance.

📄 Professional Fees

Eviction lawyers, accountants (us!), and property managers.

💡 Utilities

If you pay water, gas, or electric for the tenant.

📣 Advertising

Zillow fees, signs, website hosting for your rental.

🛠️ Repairs

Plumbing, painting, lock changes (Must be incidental).

🚮 Services

Pest control, lawn care, snow removal, cleaning.

Specialized Real Estate Pricing

Expert preparation. We calculate your depreciation basis so you don't have to.

Single Rental

$149

1 Property (Schedule E)

✅ Federal 1040
✅ 1 Rental Property
✅ Depreciation Schedule Setup

Start — $149

Portfolio

$249

Up to 3 Properties

✅ Federal + 1 State
✅ Up to 3 Properties
✅ Repair vs. Improvement Review

Select Portfolio

Investor / Airbnb

Custom

Short-Term Rental Loophole

✅ "Material Participation" Test
✅ Cost Segregation Support
✅ 1031 Exchange Reporting

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Additional properties: $50 each. Additional states: $35 each.

Landlord Tax FAQ

Can I deduct my own labor for repairs?

No. The IRS does NOT allow you to deduct the value of your own time/labor. You can only deduct the actual cost of materials and supplies, or labor paid to a third-party contractor.

What happens if my rental has a loss?

Passive Activity Loss (PAL) Rules: If your Adjusted Gross Income (AGI) is under $100,000, you can deduct up to $25,000 of rental losses against your other income (W-2). This phases out between $100k-$150k. Losses you can't use carry forward to future years.

Do I need to file a 1099-NEC?

Yes. If you paid an unincorporated service provider (handyman, gardener, cleaner, lawyer) $600 or more in a calendar year for your rental business, you are required to file Form 1099-NEC. We can prepare these for you.

Is rental income subject to Self-Employment Tax?

Generally, No. Long-term rental income is "passive" and not subject to the 15.3% SE Tax. However, if you provide "substantial services" (like a hotel/B&B with daily cleaning/meals), it becomes active business income (Schedule C) and IS subject to SE Tax.

Start Your Real Estate Return

Use our secure intake form to upload your closing statements (HUD-1), expense logs, and 1099s. We'll handle the depreciation logic.

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The Landlord's Tax Portal:Schedule E & Depreciation

The Power of Depreciation

📉 Depreciation Calculator

Repair vs. Improvement?

What did you do to the property?

The "Airbnb Loophole"

Strategy Checklist:

The Landlord's Write-Off List

Specialized Real Estate Pricing

Single Rental

Portfolio

Investor / Airbnb

Landlord Tax FAQ

Start Your Real Estate Return

The Landlord's Tax Portal:
Schedule E & Depreciation