Owning rental properties is one of the smartest ways to build long-term wealth, but if you’re not maximizing your tax deductions, you’re likely giving the IRS more than necessary.
Too many investors focus on cash flow and appreciation but overlook the tax strategy that can significantly increase their return on investment. The truth? Tax planning is just as important as deal-making when it comes to real estate.
At Insogna CPA, we work with real estate investors to ensure they’re not just filing taxes but optimizing them. Let’s break down key tax deductions you should be claiming and how they can impact your bottom line.
Are You Claiming These Rental Property Tax Deductions?
The IRS allows landlords to deduct a wide range of expenses, but many investors miss major write-offs simply because they don’t track them properly. If you own rental properties, these are the top deductions that can save you thousands.
1. Depreciation – The Most Overlooked Tax Benefit
Depreciation is one of the biggest tax advantages in real estate, yet many investors fail to maximize it.
How It Works:
- The IRS assumes rental properties lose value over time, allowing you to deduct a portion of the property’s cost each year.
- Residential properties are depreciated over 5 years, while commercial properties depreciate over 39 years.
Why It Matters:
- If you own a $500,000 rental property, you can deduct approximately $18,181 per year in depreciation even if your property is appreciating in value.
- Depreciation reduces taxable income without impacting cash flow, meaning more money stays in your pocket.
How to Maximize It:
- Consider a cost segregation study (covered below) to accelerate depreciation and increase tax savings sooner.
An Austin tax accountant can ensure your depreciation is structured properly so you don’t miss out on deductions.
2. Repairs vs. Improvements – Get This Wrong, and It’ll Cost You
Not all property expenses are created equal. Repairs can be deducted immediately, while improvements must be depreciated over time.
Repairs (Fully Deductible in the Year They Occur):
- Fixing a leaky faucet
- Patching a roof
- Replacing a broken appliance
Improvements (Depreciated Over Time):
- Installing a brand-new roof
- Upgrading an HVAC system
- Remodeling a kitchen or bathroom
Why It Matters:
- Misclassifying an expense as an “improvement” instead of a “repair” delays tax savings unnecessarily.
- A CPA in Austin, Texas can help you categorize expenses correctly to reduce your tax liability now rather than over decades.
3. Travel Expenses – Your Miles May Be Deductible
If you drive to your rental properties for inspections, maintenance, or tenant meetings, those miles may be tax-deductible.
What Qualifies:
- Driving to and from rental properties
- Visiting hardware stores for property-related purchases
- Attending real estate investment seminars or property management meetings
How to Maximize This Deduction:
- Keep detailed mileage logs or use an app to track business-related travel.
- If you own out-of-state properties, airfare, lodging, and meals may also be deductible if the trip is business-related.
An Austin small business accountant can help you claim every possible travel deduction while ensuring compliance.
4. Home Office Deduction – If You Manage Your Rentals, You Might Qualify
If you manage your rental properties from home, you may qualify for a home office deduction.
What You Can Deduct:
- A portion of your rent or mortgage interest
- Utilities (electricity, internet, water)
- Office supplies and business software
Important IRS Rules:
- The space must be used exclusively for rental property management.
- A designated home office (not a shared space) is required.
A CPA firm in Austin, Texas can help determine whether you qualify and calculate the correct deduction amount.
5. Cost Segregation – A Game Changer for Reducing Taxes
Most investors take depreciation slowly over 27.5 years, but a cost segregation study allows you to accelerate deductions and reduce taxable income much faster.
How It Works:
- Instead of depreciating your property as a single asset, a cost segregation study breaks it down into components (appliances, flooring, and fixtures) that can be depreciated faster (5, 7, or 15 years instead of 27.5).
Why It Matters:
- Reduces taxable income immediately, allowing you to reinvest savings into new properties.
Example:
- A $1 million rental property might yield an extra $50,000+ in deductions in the first year alone with cost segregation.
An Austin, TX accountant can help determine whether a cost segregation study is right for your rental property and guide you through the process.
The Power of Strategic Tax Planning for Real Estate Investors
Even if you’re tracking your expenses, you might still be missing key deductions if you’re not working with a real estate-focused CPA.
Why It Matters:
- A general CPA might not be familiar with every tax deduction available to landlords.
- Tax laws change, and real estate investors need proactive tax planning, not just tax filing.
- LLCs, trusts, or S-corps can impact tax liability and asset protection but only if structured correctly.
A CPA firm in Austin, Texas with real estate expertise can help you optimize deductions, avoid IRS audits, and ensure you’re maximizing tax savings.
Stop Overpaying Taxes on Your Rentals. Let’s Optimize Your Deductions Today!
Every dollar you save in taxes is a dollar you can reinvest in your next property. If you’re not maximizing depreciation, expense tracking, and tax strategy, you’re handing the IRS more than necessary.
At Insogna CPA, we specialize in real estate tax strategy, helping landlords and investors:
- Maximize deductions like depreciation, mortgage interest, and property management fees.
- Optimize cost segregation to accelerate tax savings.
- Ensure compliance while reducing tax liability.
Stop overpaying taxes on your rentals. Let’s optimize your deductions today! Book a consultation with a trusted Austin accounting service and start keeping more of what you earn.