Tax Deductible Rental Property Expenses: Insurance, Cleaning/Maintenance, and Repairs

Since you now are currently renting property to obtain income, it is vital to ensure that a number of fees and professional services are correctly set up and documented for IRS purposes. Below, we’ll name a few of these fundamental expenses.

Insurance

Insurance payments are pre-paid ahead of the given period of time. An illustration here would be: you purchased insurance protection for this specific rental property on March 2012 for $1200. The protection time period is from April 2012 to March 31, 2013. Since the insurance coverage timeframe does extend past the current tax year, you have to apportion and allocate the insurance premiums pertinent to this present tax year only and carry forward the balance for the upcoming reporting period. This means that $900 (9 months April to Dec 2012) or $100 per month of qualified rental utilization will be your tax deductible premium.

Note that some Insurance companies frequently bundle insurance premium plans between personal and business clients for a mark down charge. Only the company rental property pertinent part will be deducted. You need to use your individual income tax return to write off any non-business or personal use. Lastly, Title insurance isn’t suitable as an expense and must be inside the Cost Basis of the property.

Cleaning and Maintenance

If it’s related to daily cleaning and repair of general spaces, then everyday maintenance of the property is an authorized expense. Even so, the costs are only allowable when they are not on personal use days, but are on permitted rental days. Many property owners get long term contracts with local services to keep up the rental property on a continuing schedule to ensure it’s in running and useable order. This could include such expert services as window cleaning, dusting furniture, cleaning home appliances and general maintenance. Just these sorts of expert services are permitted, any major structural improvements and/or changes will have to be allotted to the Cost Basis of the rental property.

Repairs

From time to time, there will probably be some sort of necessity to mend an appliance, touch up a bit of painting, or some kind of endeavor which doesn’t call for a major reconstruction of the property structure. Depending on the leasing period, you’ll be able to write off these required and typical expenses.

Don’t include any kind of periods which will be looked at to be individual use days, because expenses are only allowable in relation to the earnings of the property. The only expenditures which are deductible are those which are related to the authorized rental time period, specifically.

  • You can obtain the various forms outlined in this article on the IRS’s site. Reference IRS Publication 527 for additional information.

Redmond 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.

Redmond CPAAbout Redmond CPA
Redmond 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.

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