Owning a rental property can be an excellent source of primary or secondary income, but the taxes involved in this business can be steep. For that reason, many people look for any possible deductions from their rental property, but the literature out there can be contradictory and difficult to follow. Below are some of basic guidelines for claiming rental property expenses when tax time rolls around. Although most tax deductions are based on expenses in a single year, rental property deductions can fall into one of two categories:

• Expenses claimed in the year that the purchases were made (as long as your tenant did not incur the costs)
• Expenses that can be claimed over a longer period of years

Those expenses claimed in the year that they were incurred include the following. 

• Management Fees – The cost of hiring a real estate agent to find tenants and let the apartment, in addition to collecting rent, can be deducted. However, if you are trying to sell a property, the commission paid to the real estate agent cannot be deducted.
• Maintenance and Repair – In most cases, replacing a part of the rental property if it is defective and requires replacement, or if you need to return something to its previous state of functionality, this can be deducted. However, new projects, such as replacing an entire roof or building a fence, are not considered deductible expenses. Furthermore, if you are repairing or replacing defective/old parts with something of significantly superior quality, this is similarly not deductible.
• Traveling Expenses – Once a property has been purchased, there will likely be a necessary amount of traveling to properly take care of a property. This will include traveling to the property to show potential tenants, to carry out maintenance and repairs, to collect rent, or to inspect the property for security deposit reasons, among others. These travel expenses can be deducted as a rental property owner, but if the travel is not solely based on the property visit or property needs, then only a partial deduction will be allowed.
• Lease Creation – If your rental property is solely used for bringing in assessable income, then the costs involved in drawing up a lease, such as preparing and registering a lease, can be deducted.
• Interest – Purchasing a rental property often requires a loan, but the interest on that loan, provided that it is being used for various property expenses, can be deducted. If you use any part of the loan for private purposes, you cannot claim the interest that accrues after that point as a tax deduction. Using the loan for maintenance and repairs, renovation work, or the purchase of depreciable assets are acceptable and can be deducted from your next tax filing.
• Obtaining Financial Backing – There are a number of expenses involved in obtaining financial backing for the purchase of a property. These may include the legal costs involved in establishing a mortgage, procuration fees, valuation expenses, and survey fees. These peripheral costs are tax-deductible, provided the property is used to produce assessable income. If the property is partially utilised for private use, the percentage of the fees being deducted should reflect the percentage of time the property is being used as a rented space.
• Miscellaneous Expenses – There are dozens of other small expenses involved as a rental property owner that can be written off and deducted as a taxpayer. Get in touch with a professional to learn more about the options you may have to save money on your rental property costs.