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By Wallace Technology LLC · Last updated: July 2026 · For the 2025 tax year (filed in 2026)

This article is educational, not tax advice — confirm your specific deductions with a qualified tax professional.

Every landlord hits the same wall at tax time: you’ve got a shoebox (or a camera roll) full of receipts, and Schedule E wants them sorted into tidy boxes. Which line does a new water heater go on? What about the gas you burned driving to the property? Is your umbrella policy “insurance” or “other”? This guide breaks down every Schedule E expense category, line by line, so each receipt lands in the right box.

We’re walking through Part I of Schedule E (Form 1040) — the form individual landlords use to report rental income and expenses.

What can landlords deduct on Schedule E?

Landlords can deduct any expense that is ordinary (common in the rental business) and necessary (helpful and appropriate for running the property). On Schedule E these are grouped into 15 numbered lines (5–19): advertising, auto and travel, cleaning and maintenance, commissions, insurance, legal and professional fees, management fees, mortgage interest, other interest, repairs, supplies, taxes, utilities, depreciation, and a catch-all “other.” If a cost clears the ordinary-and-necessary bar and it’s for your rental, it belongs on one of those lines.

Repairs vs. improvements: the distinction that matters most

Before the lines, the single distinction that trips up the most landlords: a repair keeps the property in working order (patching a roof leak) and is deducted in full this year on Line 14. An improvement adds value or extends the property’s life (a whole new roof) and generally must be capitalized and depreciated over years via Line 18 — it does not go on the repairs line.

Two practitioner safe harbors soften this in practice: the de minimis safe harbor lets you expense items up to $2,500 each (with an election on your return), and there’s a separate safe harbor for small taxpayers. When a purchase is a gray area, flag it for your accountant rather than guessing.

The Schedule E expense lines for 2026, one at a time

Line 5 — Advertising. Listing fees, “for rent” signs, photos for a listing, boosted posts to fill a vacancy, screening/application services.

Line 6 — Auto and travel. Mileage driving to the property for management, repairs, or supply runs. For 2026 the IRS standard mileage rate is 72.5 cents per mile (up from 70 cents in 2025) — or you can deduct actual vehicle costs. Either way, a contemporaneous log of dates, miles, and purpose is what makes this hold up. Out-of-town travel to check on a property can also land here (overnight trips carry stricter substantiation and a 50% meal limit — check with your accountant).

Line 7 — Cleaning and maintenance. Turnover cleans, landscaping, pest control, gutter cleaning, HVAC servicing, snow removal — the recurring upkeep that keeps the place running.

Line 8 — Commissions. Fees paid to a leasing agent or broker to find a tenant.

Line 9 — Insurance. Landlord/dwelling policy, liability, umbrella coverage, flood insurance premiums.

Line 10 — Legal and other professional fees. Attorney fees (leases, evictions), your tax preparer’s fee for the rental portion, bookkeeping.

Line 11 — Management fees. What you pay a property manager or, for short-term rentals, a co-host or management company.

Line 12 — Mortgage interest paid to banks. The interest portion of your mortgage payment (from your Form 1098) — not the principal.

Line 13 — Other interest. Interest on other loans used for the property, such as a HELOC or a credit card used solely for rental expenses.

Line 14 — Repairs. Fixing what’s broken: a leaky faucet, a broken window, repainting a room, appliance repairs. Remember — replacements and upgrades are usually improvements (depreciated via Line 18), not repairs.

Line 15 — Supplies. Consumables and small items: light bulbs, filters, cleaning products, hardware, tools, batteries, guest supplies for an STR.

Line 16 — Taxes. Property taxes, and other local taxes or license fees tied to the rental (some short-term-rental permits and occupancy taxes land here).

Line 17 — Utilities. Electric, gas, water/sewer, trash, and internet that you pay on the property.

Line 18 — Depreciation expense or depletion. The annual write-off for the building and major improvements, calculated on Form 4562 and carried here. Residential rental buildings are depreciated straight-line over 27.5 years; the land itself is never depreciable, so only the building’s basis counts. This is also where a new roof, HVAC system, or a cost-segregation study shows up — not on repairs.

Line 19 — Other. The catch-all for legitimate costs that don’t fit above: HOA dues, bank fees, and software subscriptions used for the rental. Label each one clearly; a vague “Other” is exactly what draws a second look.

Short-term rentals: a few extra notes

If you run an Airbnb or VRBO, most of your costs still map to these same lines — management/co-host fees (11), cleaning (7), supplies and guest amenities (15), and platform service fees (often 19 or 8). Two things STR owners especially shouldn’t lose: mileage (Line 6) and a contemporaneous log of your participation hours, which is what supports material-participation treatment if the IRS ever asks. (New to that test? See our 100-hour material participation guide.) The deduction is only as strong as the record behind it.

The part nobody warns you about: the record, not the return

Filling in Schedule E takes an afternoon. The hard part is the eleven months before it — capturing each receipt, tagging it to the right category and property, and logging the miles the day you drive them, instead of rebuilding it all from memory in April. A category is only useful if the receipt behind it still exists and is legible when you need it.

That’s the whole reason we built REIceipt AI: snap a receipt, it reads the amount and date, you tag it to a property and a Schedule E–style category, and it syncs to your own Google Drive as images plus a CSV your CPA can actually use. Mileage and STR participation hours get logged the same way — in the moment, per property. When tax time comes, the sorting is already done.

Schedule E categories at a glance

Here’s every Schedule E expense category in one place:

Frequently asked questions

Is a new water heater a repair or an improvement? Usually an improvement. Replacing an entire unit adds value/extends the property’s life, so it’s typically capitalized and depreciated (Line 18) rather than deducted as a repair — though the de minimis safe harbor may allow expensing lower-cost items. Confirm with your tax pro.

What Schedule E line does property management go on? Line 11 (Management fees). For a short-term rental, co-host or management-company fees go here too.

Can I deduct mileage on Schedule E? Yes — driving for your rental goes on Line 6 (Auto and travel), at 72.5¢/mile for 2026 or actual costs, as long as you keep a contemporaneous mileage log.

Where do HOA fees go? Line 19 (Other), clearly labeled.

Rules change and situations differ. This guide reflects IRS forms for the 2025 tax year (filed in 2026) and is not a substitute for advice from a qualified tax professional.