Rental Property Deductions: What Landlords Need to Know

In this episode of How to Lower Your Tax Bill, host Terrence Hutchins dives into one of the most potent tax tools for real estate investors—rental property deductions. Whether you’re managing a single unit or a growing portfolio, Terrence breaks down what qualifies as rental income, what deductions landlords often miss, and how to avoid trouble when renting to family or below market.

Key Topics Covered:

• What qualifies as rental income (including security deposits, lease break fees, and payments in kind)
• How rental income is taxed and when net investment income tax applies
• What landlords can deduct:
• How to fix missed depreciation deductions from past years using Form 3115
• The Qualified Business Income (QBI) deduction and when to use the Safe Harbor election
• Why renting to family or charging below-market rent makes your property a not-for-profit rental, disqualifying you from valuable deductions
• A key court case (Barte v. Commissioner, 1998) that shows why renting to relatives at a discount can cost you at tax time

Featured Tax Tip: Renting out a property for 14 days or less? That income can be tax-free—but if you rent long-term to family below market, expect limited deductions and potential gift tax concerns.

If you’re in the rental game, make sure you’re getting every tax break available—and avoiding traps that can cost you thousands. Subscribe to How to Lower Your Tax Bill on Spotify or Apple Podcasts.

And as always: Keep More of What You Earn.