The Real Estate Investor’s Guide to Tax Deductions in 2025

Real estate is one of the most tax-advantaged investments available—but only if you know how to take full advantage of the deductions you’re entitled to.

Whether you own a single rental or manage a multi-property portfolio, understanding your eligible tax write-offs is essential for protecting profits, reducing liability, and reinvesting with confidence.

In this guide, we’ll break down the most important real estate tax deductions for 2025, how to document them, and key updates every investor should know this year.

Why Tax Strategy Matters for Real Estate Investors

Your tax bill can significantly impact your net cash flow and your ability to scale. Savvy investors don’t just focus on buying and renting—they plan ahead to make sure every dollar works for them at tax time.

And in 2025, with inflation, interest rates, and legislation evolving, it’s more important than ever to know where you can legally reduce your tax liability.

Top Tax Deductions for Real Estate Investors in 2025

Here’s what you can deduct as a real estate investor—whether you own the property in your name or through an LLC or partnership.

1. Mortgage Interest

If you finance your rental with a loan, the interest portion of your payments is fully deductible. This is often the largest deduction for leveraged investors.

💡 DSCR loans, conventional loans, and HELOCs all qualify—just make sure they’re used for investment purposes.

2. Depreciation

Even though real estate often appreciates, the IRS allows you to deduct a portion of the property’s value each year.

• For residential rentals, depreciation is taken over 27.5 years
  
• Applies to the building value (not land)
  
• Can result in significant paper losses—even if the property cash flows
  

Bonus: Depreciation can offset rental income and even reduce your tax liability to zero in some years.

3. Repairs and Maintenance

Ordinary and necessary repairs to keep your property habitable are fully deductible in the year incurred.

Examples include:

• Plumbing fixes
  
• Appliance replacements
  
• Painting and patching
  
• HVAC servicing
  

🚫 Capital improvements (like adding a deck or new roof) must be depreciated—but there are safe harbor rules that allow faster write-offs for small repairs.

4. Property Management Fees

If you hire a manager, every dollar paid—including leasing fees, maintenance coordination, and tenant screening—is deductible.

Even self-managing landlords can deduct related expenses, like:

• Mileage for site visits
  
• Software subscriptions
  
• Advertising and marketing
  

5. Property Taxes and Insurance

Both are considered operating expenses and are 100% deductible. This includes:

• Landlord insurance
  
• Hazard/flood coverage
  
• Umbrella policies
  
• Short-term rental insurance (e.g., Proper, Steadily)
  

Pro tip: If you use renters insurance as a requirement, it’s a good idea to document this in your lease.

6. Utilities (if paid by landlord)

If you cover utilities as part of your lease agreement, you can deduct:

• Water/sewer
  
• Gas and electric
  
• Trash service
  
• Internet or cable (in STRs or furnished rentals)
  

Keep copies of monthly bills for tax season.

7. Legal, Professional & Accounting Fees

Any fees paid for professional services related to your rentals are deductible, including:

• Legal counsel for lease drafting or eviction
  
• Bookkeeping or CPA services
  
• LLC setup costs
  
• Tax prep fees
  

Hiring a real estate-specific CPA can also help you qualify for bigger deductions (like Real Estate Professional Status or QBI).

8. Travel and Mileage

You can deduct mileage or actual travel expenses related to property management, including:

• Driving to your rentals or local REIA meetings
  
• Flights and hotels for out-of-state property visits
  
• Meals (50% deductible when tied to business)
  

📌 Be sure to track mileage accurately or use an app like MileIQ to log trips.

9. Home Office Deduction

If you manage your rental business from home—even part time—you may qualify for this write-off.

You can deduct:

• A portion of rent or mortgage interest
  
• Utilities and internet
  
• Office supplies and equipment
  

Just make sure the space is used exclusively for business.

10. Education & Subscriptions

Staying educated is an expense too. Deduct:

• Real estate courses or seminars
  
• Books and subscriptions (e.g., BiggerPockets Pro, REInvestorGuide tools)
  
• Coaching and mentorship programs
  

Bonus: Cost Segregation & Bonus Depreciation

If you own a high-value property or short-term rental, consider a cost segregation study to accelerate depreciation.

While 100% bonus depreciation has phased out, 80% is still allowed in 2025, giving you a massive upfront deduction on certain assets (furnishings, appliances, etc.).

How to Maximize Your Deductions

• Keep clean records with bookkeeping software like Stessa or QuickBooks
  
• Separate business banking for all rental income and expenses
  
• Work with a real estate-savvy CPA who understands investor tax law
  
• Consider forming an LLC or S-Corp depending on your income level and goals
  
• Plan your improvements and refinancing strategically to optimize deductions
  

Final Thoughts

Taxes may be inevitable—but overpaying is not.

By understanding the deductions available to you as a real estate investor, you can legally lower your taxable income, increase your real returns, and reinvest more of your profits in 2025.

Don’t just focus on rent checks and appreciation—focus on what you get to keep after taxes.