Rental Property Tax Deductions 2026

Rental real estate offers significant tax advantages when properly structured.

Deductible Expenses

Mortgage interest. Property taxes. Insurance. Repairs and maintenance. Property management fees. Travel expenses. Legal and professional fees.

Depreciation

Residential: 27.5 years straight-line. Commercial: 39 years. Cost basis: purchase price + improvements. Land is not depreciable.

Passive Activity Rules

$25,000 loss allowance for active participants (AGI under $100K). Phaseout: $100K–$150K. Above $150K: losses suspended until sale.

Real Estate Professional Status

750+ hours in real estate. More than half in real estate. Removes passive activity limitations. Full loss deduction against other income.

Cost Segregation

Accelerate depreciation on components. 5/7/15-year property vs 27.5. Increases early-year deductions. Requires engineering study.

1031 Exchange

Defer capital gains by exchanging properties. Like-kind requirement. 45-day identification. 180-day closing. No limit on deferral.