Deductible Rental Property Costs: Insurance, Cleaning/Maintenance, and Repairs

Since you now are renting property out for income, it is essential for you to ensure that a number of fees and professional services are correctly arranged and reported for IRS considerations. On this page, we will identify a few of these fundamental costs.

Insurance

Just like the majority of premiums, this is usually pre-paid beforehand for a certain period of time. An illustration here might be: you obtained insurance for this specific property on March 2012 for $1200. April 2012 to March 31, 2013 will be the protection period of this plan. Remember that with this example, the current tax year is surpassed by the insurance policy coverage period. Therefore you will need to allot only present year applicable insurance premiums concerning this year’s taxes,and claim the rest for the upcoming period. In this particular illustration the allowable insurance premium deduction may be $900 (9 months April to Dec 2012) or $100 per month of qualified rental property use.

Business and personal clients might find a discounted rate if their insurer wants to bundle their insurance premium packages. Just the business rental property pertinent portion can be deducted. You may use your personal tax return to deduct any non business related or personal utilization. Finally, Title Insurance will not be applicable as an expenditure and must be inside the Cost Basis of the property.

Cleaning and Maintenance

If it’s applied to daily cleanliness and maintenance of commonly used spaces, then regular repair of the property can be an allowed expenditure. These expenses are limited to the hours which have been allowable leasing days rather than personal use days. To ensure that the rental property is in fine shape and functioning order, you can try what other rental property owners do, and hire a local area hired service to take care of the rental property. This might include such expert services as cleaning windows, dusting furniture, appliance cleaning and upkeep. Structural maintenance and modifications aren’t deductible, so must be included in the property’s Cost Basis.

Repairs

There are often jobs that do not require serious renovation of the framework of the rental property like painting or equipment maintenance. These expenses which are ordinary and essential are deductible in accordance with the rental time period.

Don’t include any kind of periods which will be looked at to be individual use days, because costs are only tax deductible against the earnings of the rental property. Just those expenses in which are related to the approved leasing time period are allowed.

You can get the different reports outlined in this information on the IRS’s website. If you need more information, see IRS Publication 527.


Bothell 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.

Seattle CPAsAbout Seattle CPAs
CPA for Dentists+John Huddleston has written extensively on tax related subjects of interest to small business owners. Since 2002, he has been the owner of Huddleston Tax CPAs. He is a graduate of Washington State University and the University of Washington School of Law.

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