Owner Guide · By Paul Raczynski, Florida Broker · Reviewed November 2026

PM Fees Are Deductible. Here's the Full List.

For most owners who rent a home for profit, the answer is yes. The IRS lists management fees among ordinary rental expenses, and they have their own line on Schedule E. Below are the other common rental deductions, where each one goes on the form, the limits worth knowing, and the records to keep. Every rule cites the IRS document it comes from, for tax year 2025.

This is general information, not tax advice
We are a Florida property management company, not a CPA firm. This guide summarizes IRS publications so you know what to ask about. It does not cover your situation, and tax rules change from year to year. Before you file, talk with a CPA or enrolled agent about your own return.
The short answer

Management fees are a rental expense

IRS Publication 527 (2025), the IRS’s main guide for residential rental property, says you can deduct the expenses of renting your property from your rental income. Its list of common rental expenses names management fees alongside advertising, cleaning and maintenance, insurance, interest, repairs, taxes, utilities, and depreciation. The Schedule E instructions (2025) describe the same group as ordinary and necessary expenses, including management fees and agents’ commissions.

On the form, the monthly management fee has its own line: Schedule E (Form 1040), Part I, line 11, Management fees. Expenses are generally deducted in the year you pay them (Publication 527, 2025). If your manager deducts its fee from the rent before sending you the balance, the full rent is still your income and the fee is still your expense, which is why a clean owner statement that shows both matters at tax time.

Vacant months count too. Publication 527 (2025) says that if you hold a property for rental, you may be able to deduct ordinary and necessary expenses, including depreciation, for managing, conserving, or maintaining it while it is vacant. What you cannot deduct is the rent you did not collect.

A note for Florida owners: Florida does not levy a personal income tax on its residents. Section 220.02 of the Florida Statutes (2026) cites the state constitution’s mandate, Article VII, Section 5, that no income tax be levied on natural persons who are Florida residents and citizens. Federal tax still applies, and that is where Schedule E lives. If you own a Florida rental but live in another state, ask your CPA how your home state treats the income.

Beyond the management fee

Other common rental deductions

These are the expenses owners ask about most. Each one comes from IRS Publication 527 and the Schedule E instructions for tax year 2025.

Repairs and maintenance
Fixing what breaks and keeping the home in working order, like repairing a broken lock or painting a room. Deducted in the year you pay. Repairs go on Schedule E line 14; cleaning and maintenance on line 7.
Depreciation
The cost of the building, not the land, recovered a little each year. Residential rental property is depreciated over 27.5 years under the IRS’s general system. It goes on line 18.
Insurance
Premiums for insuring the rental, such as landlord and flood policies, are deductible on line 9. If you prepay more than one year, you deduct only the part that covers each year.
Mortgage interest
Interest on a loan used for the rental goes on line 12. Points that are purely for the use of money are prepaid interest, generally deducted over the life of the loan, not all at once.
Property taxes
Real estate taxes you pay on the rental are a rental expense. They go on line 16 of Schedule E.
Travel and local transportation
Driving to collect rent or to manage, conserve, or maintain the home can count. For tax year 2025, the IRS standard mileage rate is 70 cents a mile. It goes on line 6.

Advertising, utilities you pay, legal and professional fees for the rental, and supplies round out the list. Travel has limits: the IRS treats trips between your home and the rental as commuting unless your home is your principal place of business, and you cannot deduct travel away from home when the main purpose is to improve the property (Publication 527, 2025).

The line owners blur most

Repairs versus improvements

The difference decides whether a bill comes off this year’s income or gets spread across many years.

A repair: deduct it this year

The Schedule E instructions (2025) define repairs and maintenance as costs that keep the property in an ordinarily efficient operating condition. Their examples: fixing a broken lock or painting a room.

Most of what a property manager handles in a normal month, the leaking faucet, the stuck garage door, the service call, falls on this side.

An improvement: depreciate it

Publication 527 (2025) says you must capitalize costs that result in a betterment (fixing a pre-existing defect, enlarging the home, or raising its capacity, strength, or quality), a restoration (replacing a substantial structural part, or rebuilding to like new condition), or an adaptation to a different use.

The Schedule E instructions’ examples: adding substantial insulation or replacing an entire HVAC system.

Publication 527 also describes elections that can let some costs be deducted rather than capitalized, including the de minimis safe harbor and the routine maintenance safe harbor. Whether they fit your return is a decision for your CPA, which is one more reason to keep every invoice with a clear description of the work.

Depreciation basics

The deduction you never write a check for

You do not pay for depreciation each year. It recovers what you paid for the building over time. Four rules from Publication 527 and the Schedule E instructions (2025) cover most of it.

27.5 years
Residential rental property is depreciated over 27.5 years, using the straight line method, under the IRS’s general depreciation system (MACRS GDS).
Land does not depreciate
Only the building’s cost goes into the depreciation basis. The part of your purchase price that paid for the land is left out.
It starts when the home is ready to rent
Depreciation begins when the property is available and ready for rental use, not when the first tenant moves in. A mid-month convention sets how much you take in that first year.
Form 4562 in certain years
You attach Form 4562 for property first placed in service during the year, and for listed property such as a vehicle. Improvements are depreciated on their own schedule from the date placed in service.

Depreciation also matters when you sell, because it lowers your basis and affects your gain. That is the main reason to keep purchase and improvement records for as long as you own the home.

Where it goes

A map of Schedule E, Part I

Line numbers are from Schedule E (Form 1040) for tax year 2025. Each rental property gets its own column on the form.

Line Label on the form What usually goes there
3 Rents received Rent collected for the year, including advance rent in the year you receive it.
5 Advertising Listing and marketing costs to find a tenant.
6 Auto and travel Mileage or actual car costs, plus parking and tolls, for rental trips.
7 Cleaning and maintenance Routine upkeep, turnover cleaning, lawn and pool service.
8 Commissions Leasing commissions paid to rent the home.
9 Insurance The rental’s share of premiums for the year.
10 Legal and other professional fees Attorney and other professional fees for the rental.
11 Management fees Your property manager’s monthly fee.
12 Mortgage interest paid to banks Interest on the loan used for the rental.
14 Repairs Repairs that keep the home in working order. Not improvements.
16 Taxes Real estate taxes on the rental.
17 Utilities Utilities you pay as the landlord.
18 Depreciation expense or depletion This year’s depreciation, figured with Form 4562 where required.
19 Other Ordinary and necessary costs with no line of their own.

Most long term rentals belong on Schedule E. IRS Topic 414 notes that if you provide substantial services mainly for the tenant’s convenience, the income and expenses go on Schedule C instead.

Know the limits

When a deduction does not reduce your tax this year

A deductible expense is not always usable right away. These are the rules that most often change the answer.

Passive activity limits
Rental losses are generally passive. If you actively participate, you may deduct up to $25,000 of rental loss against other income. That allowance starts to phase out above $100,000 of modified AGI and is gone at $150,000 (Instructions for Forms 8582 and 8582-CR, 2025; Publication 925).
Personal use of the home
If you use the home yourself for more than the greater of 14 days or 10% of the days it is rented at a fair price, the IRS treats it as a residence and expenses must be divided (IRS Topic 415). Rented fewer than 15 days as a residence, it is not reported at all.
Deposits and advance rent
A security deposit you plan to return is not income when received. Advance rent is income in the year you receive it, and a deposit that will be used as the last month’s rent counts as advance rent (Publication 527, 2025).
Records to keep

What to keep, and for how long

A deduction you cannot document is a deduction you may lose. Keep these in one folder per property, per year.

The file for each rental
  • Owner statements from your property manager showing every rent payment, fee, and invoice
  • Receipts and invoices for every repair, with a note on what was done and where
  • Your closing statement and purchase records, which set your starting basis for depreciation
  • Receipts for every improvement, kept until you sell, because improvements add to your basis
  • Insurance policies, property tax bills, and the year end mortgage interest statement from your lender
  • A mileage log for rental trips: date, destination, purpose, and miles
  • Leases, deposit records, and any Forms 1099 you receive or send for the rental
How long the IRS says to keep them

The IRS page “How long should I keep records?” sets the general period at 3 years from the date you filed the return. It runs 6 years if you leave out income that is more than 25% of the gross income shown on the return, and indefinitely if no return was filed or a return was fraudulent.

Property records run longer. Keep them until the period of limitations expires for the year you dispose of the property, because you need them to figure depreciation and your gain or loss on the sale.

On our full service plans, you get a monthly owner statement with every payment, fee, and invoice, year end 1099s, and an owner portal you can check any day. See how our rent collection and owner reporting work.

Where our fees fit on your return

Our plans are published in full: Lease Only at 0% monthly, 24 Managed at 8% monthly, and 24 Protected at 9% monthly, charged on rent we collect. On full service, the monthly fee is the line 11 figure on your owner statement, and every invoice we pay on your behalf is listed next to it, so your CPA is not left sorting receipts.

See every plan and fee on our pricing page. Comparing managers? Our Orlando property management fees guide explains what each kind of fee covers and what to ask before you sign.

Sources used in this guide
  • IRS Publication 527 (2025), Residential Rental Property
  • IRS Schedule E (Form 1040) and Instructions for Schedule E (2025)
  • IRS Tax Topic 414, Rental income and expenses
  • IRS Tax Topic 415, Renting residential and vacation property
  • IRS Instructions for Form 8582 (2025) and Publication 925, passive activity limits
  • IRS, “How long should I keep records?” (Small Business and Self Employed)
  • Florida Statutes (2026) §220.02 and Florida Constitution Article VII, Section 5

Figures are for tax year 2025, the most recent year with final IRS publications when this guide was reviewed in November 2026. Check the current year’s versions at irs.gov before you file.

Rental tax deductions: questions, answered

Are property management fees tax deductible?
For most owners renting a home for profit, yes. IRS Publication 527 (2025) lists management fees among ordinary rental expenses, and they are reported on Schedule E, line 11. Limits such as the passive activity rules or personal use of the home can affect how much of a rental loss you use in a given year. This is general information, not tax advice, so confirm your situation with your CPA.
Where do I put property management fees on my tax return?
On Schedule E (Form 1040), Part I, line 11, “Management fees,” for the property they relate to. If a short term rental provides substantial services for guests, the IRS may treat it as a business reported on Schedule C instead (IRS Topic 414). Your CPA or tax software will place each figure on the right line.
Is a tenant placement fee deductible?
It is a cost of renting the property, and Schedule E has a separate line for commissions (line 8). How and when a one time leasing fee is deducted can depend on the lease, so this is a good question to bring to your CPA along with your owner statement.
What is the difference between a repair and an improvement?
A repair keeps the home in its ordinary working condition, like fixing a broken lock or painting a room, and is deducted in the year you pay it. An improvement is a betterment, a restoration, or an adaptation to a new use, like replacing an entire HVAC system, and is generally depreciated over time (Instructions for Schedule E and Publication 527, 2025).
Can I deduct expenses while my rental is vacant?
Publication 527 (2025) says that if you hold a property for rental, you may be able to deduct ordinary and necessary expenses, including depreciation, for managing, conserving, or maintaining it while it is vacant. You cannot deduct the rent you lost while it sat empty.
Does Florida have a state income tax on rental income?
Florida does not levy a personal income tax on its residents. Section 220.02 of the Florida Statutes cites the state constitution’s mandate (Article VII, Section 5) that no income tax be levied on natural persons who are Florida residents and citizens. Federal tax still applies, and if you live in another state, ask your CPA how your home state treats Florida rental income.
How long should I keep rental tax records?
The IRS says the general period is 3 years from the date you filed the return, with longer periods in some cases. Records about the property itself, like your purchase and improvements, should be kept until the period of limitations expires for the year you sell or otherwise dispose of it, because you need them to figure depreciation and your gain or loss.
Is this tax advice?
No. This guide is general information drawn from IRS publications for tax year 2025, written by a Florida real estate broker, not a CPA or tax attorney. Tax rules change and your facts matter. Before you file, talk with a CPA or enrolled agent about your own return.

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