It’s December, and while many people are busy with holiday plans, this season isn’t just about gifts under the tree. It’s also the perfect time for real estate investors to unwrap valuable savings. If you own rental property in the Detroit area, now is the moment to take advantage of end of year tax deductions for rental properties that can strengthen your bottom line and set you up for a brighter financial start in the New Year.
Whether you live locally or manage your investments from afar, smart tax planning in December can reduce your taxable income and increase your return on investment. Many rental property owners leave money on the table simply because they don’t know what’s deductible. Don’t let that be you.
Common Tax Deductions for Rental Property Owners
As you prepare for year end festivities, take a moment to review these common deductible expenses, because a little strategy now can pay off big when tax time rolls around.
1. Mortgage Interest
One of the largest and most valuable tax deductions for rental property owners is mortgage interest. If you have a loan on your rental property, the interest portion of your monthly payments is generally fully deductible. This can add up quickly, especially for newly purchased or refinanced properties. For example, if you pay $800 per month in mortgage interest, that’s $9,600 in potential deductions over the course of a year.
2. Property Taxes
You can also typically deduct property taxes paid on your rental property. In a market like Detroit, where tax rates and assessments can vary from neighborhood to neighborhood, it’s important to keep accurate records. These deductions directly reduce your rental income and can make a significant difference when filing your return.
3. Repairs and Maintenance
Routine repairs and maintenance are fully deductible in the year they’re completed. This includes expenses like fixing a furnace, unclogging a drain, or patching a leaky roof. Just be sure to distinguish between repairs (which are deductible immediately) and capital improvements (which must be depreciated over time). A $400 plumber bill to fix a broken pipe? That’s a straightforward deduction. The IRS sets guidelines annually so be sure to check them for the current year.
4. Depreciation
Depreciation is one of the most powerful but underused tax deductions for rental property owners. While you can’t depreciate the land, you can depreciate the structure of the rental property over 27.5 years (IRS). That means a portion of the property’s value can be written off every year, even if you didn’t have any major expenses. Depreciation helps reduce your taxable income and increase long term profitability.
5. Other Deductible Expenses
Don’t forget about additional deductible costs like property management fees, insurance premiums, travel expenses (for local or remote investors), legal and professional services, and even advertising costs to fill a vacancy. These smaller items add up and are all part of reducing your year end tax liability. Just be sure to check current local, state, and federal guidelines to confirm which deductions are allowed and how they apply to your specific situation. Tax laws can change, and staying informed ensures you maximize every opportunity available to you as a rental property owner.
Wrap Up the Year with Smart Financial Moves
While you’re decking the halls and checking gift lists, don’t forget to check off these powerful tax deductions for rental property as part of your end of year strategy. A little planning now can bring big savings come tax season and help set your portfolio up for a prosperous 2026.
If you’re ready to maximize your real estate investment strategy, contact the FIRE Realty Team. Whether you’re local to Detroit or investing from across the country, our deep market knowledge and trusted real estate network can help you make smart moves all year long. Let our expertise guide you through buying, managing, and growing your rental portfolio with confidence and clarity.
