Differentiate Repairs vs. Improvements - Repairs (e.g., fixing a leaky faucet) are immediately deductible. - Improvements (e.g., renovating a kitchen) must be capitalized and depreciated over time. Tip: Knowing this difference helps you maximize current-year deductions.

You can deduct most expenses related to managing your rental property, including: - Mortgage interest - Property taxes - Insurance - Repairs and maintenance - Property management fees - Legal/accounting fees - Utilities (if you pay them) NOTE: Please keep meticulous record at least monthly. I can tell you from experience, trying to go back a year and a half after the fact an identify deductions is a huge pain and leaves deductions uncounted.

Depreciation for residential rental property is over 27.5 years and for commercial property it is over 39 years. This is a non-cash deduction, meaning it reduces taxable income without affecting cash flow. Depreciation can significantly reduce your tax liability even if your property is generating positive cash flow. For higher cost acquisitions consider a cost segregation study to accelerate depreciation (e.g., for components like appliances, carpet, etc.) and front-load your deductions.