As tax season heats up (filing officially starts January 26, 2026!), rental property owners have a golden opportunity to slash their taxable income. If you report rental income on Schedule E (Form 1040), you’re likely sitting on thousands in deductible expenses that most landlords overlook or misclassify.
Rental income is taxable, but the IRS allows you to deduct ordinary and necessary expenses for managing, maintaining, and conserving your property. Get this right, and you could turn a taxable profit into a net loss that offsets other income (subject to passive activity rules).
The big question: Are you claiming everything you’re entitled to? Many landlords confuse repairs (immediate full deduction) with improvements (depreciated over time), leaving money on the table. Plus, with 2026 updates like 100% bonus depreciation restored for qualifying assets placed in service after January 19, 2025 (thanks to the One Big Beautiful Bill), now’s the time to upgrade appliances or furnishings for massive first-year write-offs.
Here are the top 10 common Schedule E rental deductions every landlord should know for 2026. Track these throughout the year—your future self (and your wallet) will thank you.
1. Mortgage Interest (Often Your Biggest Win)
Deduct the interest paid on loans for your rental property (reported on Form 1098 from your lender). Unlike personal homes, there’s no $750,000 cap for investment properties—deduct it all on Schedule E, line 12.
Pro tip: If you refinanced, points may be deductible over the loan term.
2. Property Taxes
Real estate taxes paid on the rental are fully deductible on line 16—no SALT cap applies here like it does on Schedule A for personal use. In high-tax areas like Chicago, this can be a game-changer.
3. Depreciation (The Silent Wealth Builder)
You can depreciate the building (not land) over 27.5 years using straight-line MACRS. Personal property like appliances or furniture? Use shorter periods (5-15 years).
2026 bonus alert: 100% bonus depreciation is back for qualified assets (e.g., new HVAC, appliances) placed in service after Jan 19, 2025—deduct the full cost in year one! Section 179 limits are up to $2.5M too. Don’t miss this for big renovations.
4. Repairs & Maintenance (Immediate Deduction Gold)
Fixing a leaky faucet, repainting walls, or patching a roof? Fully deductible in the year paid on line 14.
Thought-provoking myth-buster: The IRS draws a clear line—repairs keep the property in good condition (deduct now), but improvements add value or extend life (depreciate). Get it wrong, and you could face an audit or lose thousands in immediate savings.
5. Insurance Premiums
Landlord liability, property, flood, or umbrella policies? Deduct on line 9. Prorate if paid in advance.
6. Utilities & Supplies (If You Pay Them)
Water, electricity, gas, trash removal, or cleaning supplies for turnovers? Deduct on line 17 (utilities) or line 15 (supplies). Tenant-paid utilities? Not deductible, but report as income if reimbursed.
7. Auto & Travel Expenses (Mileage Magic)
Driving to check on tenants, show the property, or buy supplies? Use the 2026 standard mileage rate of 72.5 cents per mile (up from 70 cents in 2025) on line 6—or actual expenses. Keep detailed logs!
8. Professional Fees & Management
Accountant fees for Schedule E prep, attorney costs for evictions, or property manager commissions (8-12% typical)? Deduct on line 10 (legal/professional) or line 11 (management).
9. Advertising & Commissions
Listing on Zillow, Craigslist, yard signs, or tenant finder fees? Deduct on line 5 (advertising) or line 8 (commissions).
10. Other Expenses (Don’t Forget These Hidden Gems)
Home office (if qualifying), HOA fees, pest control, landscaping, or travel for out-of-state properties. List on line 19 with details.
Quick visual tip: Imagine a before-and-after of a rental kitchen—new appliances could qualify for 100% bonus depreciation, turning a $10,000 spend into an immediate tax shield.
Pro Tips to Maximize & Avoid Pitfalls
• Repairs vs. Improvements: Paint a rental room? Repair (deduct now). Full kitchen remodel? Improvement (depreciate).
• Passive Loss Limits: Most rentals are passive—losses may be limited unless you’re a real estate professional. Track hours!
• Recordkeeping: Receipts, mileage logs, and photos are your audit armor. Use apps for easy tracking.
• 2026 Timing: Filing starts Jan 26—gather your 1098s, repair invoices, and depreciation schedules now.
Claiming these deductions could mean a bigger refund (or smaller bill) this year. Many landlords save $3,000–$15,000+ annually by getting organized.
What’s your biggest Schedule E deduction? Mortgage interest? Depreciation? Drop a comment below—I read every one! If you’re a landlord prepping for 2026 taxes, subscribe for daily tips (including tomorrow’s deep dive on short-term vs. long-term rentals).
Ready to claim more? Let’s make 2026 your most tax-efficient year yet! 💰🏠
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