Property Write‑Offs Made Simple: How to Save on Real Estate Taxes

If you own a rental home, a commercial space, or even a piece of land that generates income, the tax code lets you write off many of the costs. Those write‑offs can shrink your taxable income and keep more cash in your pocket. Below you’ll see the most common deductions, how to calculate depreciation, and tips to avoid common mistakes.

What Expenses Count as a Property Write‑Off?

Not every bill qualifies, but most costs that keep the property running do. Typical write‑offs include:

• Mortgage interest – the interest portion of your loan payment.
• Property taxes – any local taxes you pay each year.
• Insurance premiums – home, landlord, and liability coverage.
• Repairs and maintenance – fixing a leak, repainting, or replacing a broken furnace.
• Utilities – if you pay water, electricity, or gas for the rental.
• Management fees – what a property manager charges you.
• Advertising – costs to find new tenants.

Keep receipts and record every payment. The IRS can ask for proof, so organized documentation saves headaches later.

Depreciation: The Big Tax Saver You Might Miss

Depreciation spreads the cost of the building (not the land) over its useful life, usually 27.5 years for residential rentals and 39 years for commercial properties. Here’s a quick way to estimate it:

1. Find the purchase price of the property.
2. Subtract the land value – you can use a local tax assessor’s estimate.
3. Divide the remaining amount by the appropriate number of years (27.5 or 39).
4. The result is your annual depreciation deduction.

Example: You buy a house for $200,000, and the land is worth $50,000. The building cost is $150,000. Divide $150,000 by 27.5 and you can deduct about $5,455 each year, even if you don’t actually spend that money.

Depreciation works even if you rent the property for only part of the year. Just prorate the deduction based on the months it was rented.

Remember, depreciation reduces your basis in the property, which can affect capital gains when you sell. That’s why many investors use a 1031 exchange to defer taxes.

Below are a few practical tips to make the most of your write‑offs:

• Track every expense in a spreadsheet or accounting app – it’s easier than digging through old emails.
• Separate personal and business use. If you live in one unit and rent the other, allocate expenses based on square footage.
• Consider hiring a tax professional for complex situations. A small fee can save you much larger taxes.
• Review your tax return each year. Mistakes happen, and you can amend a return within three years.

Using property write‑offs isn’t a trick; it’s a legal way to reflect the real cost of owning and operating real estate. By staying organized and understanding depreciation, you can lower your tax bill and boost the cash flow from your investments.

Start today: pull out your latest mortgage statement, list the expenses you paid in the last twelve months, and run the simple depreciation formula. You’ll see instantly how much you can claim. With that knowledge, you’ll be ready to file a smarter return and keep more profit from the property you work hard to manage.