Owning rental property in Washington can be a strong wealth-builder — but only if you take full advantage of the tax deductions available to you. Many landlords overpay simply because they don’t realize how many rental expenses the IRS allows them to deduct.
This guide breaks down the most important tax deductions for rental property owners, with notes that matter specifically for Washington State landlords.
Top Tax Deductions for Rental Property Owners
1. Mortgage Interest
If you have a loan on your rental property, the interest portion of your mortgage payment is deductible.
This is often one of the largest write-offs in the early years of a loan. Only interest counts — not the principal.
Also deductible:
- Interest on loans used to improve the property
- HELOC interest if the funds were used for the rental
2. Property Taxes
Property taxes paid to your county (King, Pierce, Snohomish, etc.) are deductible as a rental expense.
For landlords, these are treated as a business expense, not just a personal SALT deduction, which makes them fully deductible against rental income.
3. Repairs and Maintenance
Routine work that keeps the property in good operating condition is deductible in the year you pay for it.
Examples:
- Fixing leaks
- Replacing a broken window
- Appliance repairs
- Interior painting between tenants
- Plumbing or electrical fixes
Not included: Major improvements (like a new roof or full remodel). Those must be depreciated over time (more on that below).
4. Depreciation
Depreciation lets you deduct the cost of the property (not the land) over time — even if the property is increasing in value.
Residential rental property is typically depreciated over 27.5 years.
Example: If the building value (excluding land) is $275,000, you could deduct about $10,000 per year in depreciation — even if you didn’t spend that money this year.
This is often the deduction that turns a “profitable” rental on paper into a tax loss.
5. Property Management Fees
If you hire a property manager in Seattle, Tacoma, Bellevue, or elsewhere, their fees are fully deductible.
This includes:
- Monthly management fees
- Tenant placement/leasing fees
- Lease renewal fees
6. Advertising and Marketing
Money spent finding tenants is deductible.
Examples:
- Online rental listings
- Professional photography
- Yard signs
- Tenant screening services
7. Legal and Professional Fees
Professional help related to your rental business is deductible.
This includes:
- CPA or tax prep fees related to the property
- Attorney fees for lease drafting or eviction
- Bookkeeping services
8. Cleaning, Turnover, and Maintenance Services
Expenses between tenants add up — and they’re deductible.
- Carpet cleaning
- Housekeeping
- Junk removal
- Landscaping and yard care
- Pest control
9. Insurance Premiums
Most insurance tied to the rental is deductible:
- Landlord insurance policy
- Liability insurance
- Umbrella policies covering rental activity
- Flood or earthquake insurance (common considerations in parts of WA)
10. Travel and Mileage
If you drive to your rental property for management or maintenance, those miles may be deductible.
This can include trips for:
- Inspections
- Meeting contractors
- Showing the property
Keep a mileage log — the IRS requires documentation.
11. Utilities You Pay
If you cover utilities for tenants, those payments are deductible.
Examples:
- Water / sewer
- Garbage
- Electricity or gas (if landlord-paid)
- Internet for common areas in multifamily properties
12. Capital Improvements (Depreciated)
Bigger upgrades must be depreciated over time rather than deducted all at once.
Examples:
- New roof
- HVAC system
- Full kitchen remodel
- Adding a deck or garage
These improvements still reduce your taxes — just spread over multiple years.
Special Considerations for Washington Landlords
Washington has no state income tax. That means your rental profits aren’t taxed at the state level — only federally. However, you still need to understand federal tax rules and local obligations (like business licensing or city regulations), because that’s where most deductions — and mistakes — happen.
For example, some cities, like Seattle, require rental business licenses, and those fees may be deductible as a business expense. Additionally, short-term rentals such as Airbnb or VRBO properties may be subject to local lodging taxes, different tax treatment, and potentially Washington Business & Occupation (B&O) tax. Long-term residential rentals are generally treated differently than short-term stays.
What About Rental Losses?
If your deductions exceed your rental income, you may have a rental loss.
Depending on your income and level of involvement, you may be able to offset other income or carry losses forward to future years.
This is an area where a CPA familiar with rental real estate is especially valuable.
Recordkeeping: Your Secret Weapon
To safely claim tax deductions for rental property, keep:
- Receipts and invoices
- Mortgage statements
- Property tax bills
- Mileage logs
- Bank and credit card statements used for the rental
Good records don’t just maximize deductions — they protect you in case of an audit.
Bottom Line
Understanding tax deductions for rental property owners can dramatically lower your tax bill and improve your cash flow. From mortgage interest and repairs to depreciation and management fees, nearly every cost of running your rental can potentially reduce your taxable income. You can read more about which rental expenses are deductible in the IRS’s official Publication 527: Residential Rental Property.
If you own rental property in Washington State, make sure you’re tracking expenses carefully and working with a tax professional who understands real estate — because the difference between breaking even and building real wealth often comes down to smart tax strategy.
Need Help Managing Your Washington Rental Property?
Maximizing tax deductions is only part of running a profitable rental. The right property management team can also help reduce vacancies, control maintenance costs, and keep you compliant with Washington’s complex and changing rental regulations.
The Joseph Group works with rental property owners across Washington to protect your investment and improve long-term returns. From tenant screening and leasing to maintenance coordination and legal compliance, their team helps take the day-to-day stress off your plate.
If you want your property to perform like a true investment — not a second job — reach out to The Joseph Group to learn how professional management can support your rental goals.
