Rental Real Estate - Deductible Expenses

Continuing our discussion from last month on rental real estate investments. What expenses are deductible against your rental real estate income? The IRS allows expenses to be deducted from your rental income that are necessary to the management of the property. This will include the usual things like advertising, property taxes, landlord's insurance, and mortgage interest. However, did you know you can also take a portion of the cost of the building each year as an expense? This is called depreciation. Also, if you use your cell phone or home internet connection to manage the property, you can take a portion of those expenses as well. If you travel overnight to manage an out of town rental, you can deduct travel expenses, including meals. It's important to keep excellent records to ensure that you can justify all the deductions you take on your rental properties.