Use the categories the tax return uses, and add one split the return does not show: repair versus improvement. IRS Publication 527 lists the deductible rental expenses — advertising, cleaning and maintenance, insurance, legal and professional fees, management fees, mortgage interest, repairs, supplies, taxes, utilities, depreciation — and the tangible property regulations decide whether a cost is a currently deductible repair or a capitalised improvement (a betterment, restoration or adaptation), with the de minimis safe harbor allowing items up to $2,500 per invoice or item to be expensed by a taxpayer without an applicable financial statement. Categories that match the return make January a copying exercise; a category called “miscellaneous” makes it an investigation.
The categories
| Category | Typical items | Tax treatment |
|---|---|---|
| Advertising | Listing fees, signs, photography | Deductible |
| Cleaning and maintenance | Turnover cleaning, yard, pest control, filters | Deductible |
| Repairs | Fixing what broke; replacing a part, not a system | Deductible; see the improvement test |
| Improvements (capital) | Roof, HVAC system, additions, kitchen remodel | Capitalised and depreciated (27.5 years for the building) |
| De minimis items | Appliances, fixtures ≤ $2,500 per invoice or item under the election | Expensed with the safe-harbor election |
| Insurance | Landlord policy, flood, TWIA, umbrella | Deductible |
| Taxes | Property tax by county; HOA is a separate line | Deductible |
| Utilities | Landlord-paid water, electricity, gas, trash | Deductible |
| Management and professional fees | Manager, accountant, lawyer, screening fees | Deductible |
| Mortgage interest | Interest only; principal is not an expense | Deductible |
| Travel | Mileage at the IRS rate or actual costs; log required | Deductible with substantiation (IRS) |
| Licences and registration | City rental permits, STR permits, occupancy licences | Deductible |
Applying them
- Categorise at payment, on the receipt or the bank export, not in January.
- Split any invoice that mixes repair and improvement; the contractor’s description decides (see the repair vs improvement guide).
- Tag every expense to a property; a shared cost (one insurance policy, one accountant) is allocated by a stated rule.
- Keep security deposits out of income and out of expenses until kept or applied (IRS Pub. 527).
Frequently asked questions
What expense categories should a Texas landlord use?
The Schedule E categories in IRS Publication 527 — advertising, cleaning and maintenance, insurance, professional fees, management, mortgage interest, repairs, supplies, taxes, utilities, depreciation — plus a separate capital-improvement category (IRS Publication 527).
Is a new appliance a repair or an improvement?
An appliance is a separate unit of property; under the de minimis safe harbor a taxpayer without an applicable financial statement may expense items up to $2,500 per invoice or item; above that it is generally capitalised (IRS tangible property regulations).
Are city rental permits deductible?
Registration, permit and licence fees paid to operate the rental are ordinary expenses of the rental activity (IRS Publication 527).
Sources
Rules change and the right answer can depend on the home, the city, the lease and the timing. These are the official pages this guide relies on; check them before signing, charging a fee, sending a notice or making a legal decision.
- IRS Publication 527 (2025) — Residential Rental Property ↗
- IRS — Tangible property final regulations (de minimis, small taxpayer and routine maintenance safe harbors) ↗
- IRS — Standard mileage rates ↗
- IRS — Tips on rental real estate income, deductions and recordkeeping ↗
General information for U.S. landlords, with a Texas focus. This guide is not legal, tax or accounting advice. Consult a qualified professional for your situation. Written by the rentalfreelease.com Editorial Team; last reviewed September 19, 2026.