Landlords can deduct wages and salaries for employees, such as for residential managers and staff grounds maintenance workers. Other tax-deductible services that can be used as deductions are independent contractors, such as:

• Carpenters, electricians and plumbers;
• Architects, landscapers and gardeners;
• Roofers, carpet-layers and painters.

 

Keep each contractor’s tax ID number, especially if they are unincorporated, and submit the amount you paid them on IRS Form 1099-MISC. If you paid the contractor less than $600 over the course of the year, this form is not required. However, you are still allowed to deduct the expense.

A landlord is allowed to deduct any reasonable expenses used in the conduct, maintenance and managing of her rental properties. That includes:

• Utilities
• Taxes
• Necessary and reasonable repairs to the property
• Travel costs incurred while doing business

Expenses that are sometimes overlooked, according to David Ayoub, CPA in Syracuse, N.Y., are meal and entertainment expenses for employees. “You can only deduct 50 percent of meal and entertainment expenses incurred while doing business with potential clients or business associates. However, if you throw a Christmas party or a summer picnic for your staff, it’s 100 percent deductible.”

It’s not unusual for someone to become a landlord out of circumstantial necessity.

“You see people moving out of town or state to go to a better job. If they can’t sell their house, they rent it,” Ayoub notes. “If you rent your home for three years out of five, and then sell it, the capital gain is taxable.

However, if you sell it within two years, you don’t have to claim capital gain. You’re also entitled to the same deductions as any other landlords. As with any rental property, make sure you have landlord insurance on your home. It’s deductible as an expense, too.”

Updated for Tax Year 2014 turbotax.intuit.com