Rental for Profit

• Rental property is an investment property, which means that the homeowner does not use the property or uses it rarely. According to IRS code, if you rent out your property for more than 14 days in a calendar year, you must report all rental income on your tax return. IRS Publication 527 regulates rental-for-profit activities. Report all rental income and expenses on the Schedule E Supplemental Income and Loss form, an attachment to your annual Form 1040. To deduct any expense, the IRS requires you to produce written receipts for the claimed expenses upon request.
  
  

Mortgage Interest and Depreciation

• As a rental property owner you may qualify for several tax deductions. These deductions include mortgage interest expense and real estate depreciation. Landlords can deduct interest paid on the mortgage loan up to an annual maximum. The IRS also allows rental property owners to write off interest from multiple mortgages. Additionally, a rental property owner can deduct depreciation, as every year the value of the building decreases because of normal wear and tear. According to the IRS, a residential house depreciates over 27.5 years. The longer you keep a rental house, the more this deduction will benefit you.
  
  

Care and Maintenance

• Landlords can also write off some operating expenses associated with the rental property, including repairs, cleaning, advertising and travel. While you can deduct routine repairs that maintain your property in rentable condition, you can only depreciate home improvements. This means you can only claim a portion of their value of the home improvement in the current tax year. The IRS also allows you to deduct the cost of maintaining the property while the property sits temporarily vacant awaiting new tenants. Additionally, you can deduct the actual expense of any travel required to operate your rental property business or use the IRS standard mileage deduction.
  
  

Losses, Insurance and Services

• Property owners can obtain claim a tax deduction for a loss incurred to a rental building from a natural disaster such as an earthquake or flood. This deductibility, however, depends on the insurance coverage and the extent of the damage. In many cases, even partial damage is tax-deductible. You can also deduct insurance premiums on your rental property. If you use a professional service for your rental property, such as an accountant or attorney, the fees charged by these professionals are also tax-deductible.