Routine Maintenance

• The cost of routine maintenance performed on a rental property is considered a tax-deductible rental expense. The cost of general repairs like fixing walls, roofing, plumbing and other issues to keep a rental unit in proper working condition is deductible. The IRS says that improvements that increase the value of a property, such as adding a new room or replacing a roof with a new one, are not considered repairs. The cost of improvements can be deducted over time by taking tax deductions for depreciation. Utilities like the cost of electricity, gas and water and other normal operating expenses associated with a rental property are also tax deductible.
  
  

Taxes and Interest

• The cost of real estate taxes charged on personal dwellings and rental properties is tax deductible. The IRS states that mortgage interest paid on a loan taken out to purchase a rental property is also tax deductible. Mortgage interest and real estate taxes can amount to thousands of dollars a year, which means that deducting them can result in significant tax savings.
  
  

Other Rental Expenses

• A variety of other rental unit expenses are deductible on income taxes. The IRS lists the following as examples of other tax deductible expenses: tax preparation fees related to rental income, the cost of traveling away from home to manage or maintain a rental property, advertising expenses, insurance and legal fees.
  
  

Personal Use of Rental Units

• Individuals who choose to rent out homes to earn extra income may rent out a property for part of the year but use the property for personal purposes at other times during the year. The IRS states that if a landlord uses a rental unit for personal purposes, he can only deduct rental expenses based on the proportion of time the unit is rented out. For example, if a landlord rents out a home 75 percent of time and uses it himself 25 percent of the time, he can only deduct 75 percent of rental expenses.