If you own rental property in Sacramento, maximizing your tax deductions is one of the easiest ways to increase your net rental income. Tower Bridge Property Management helps Sacramento landlords stay organized, compliant, and prepared for tax season. This comprehensive guide explains every major rental property deduction, how they work, and how we help simplify year-end reporting.
Tower Bridge Property Management is not a licensed tax preparer or accounting firm. The deductions listed in this guide may or may not apply to your specific financial or tax situation. Tax laws change frequently, and individual circumstances vary. We strongly recommend consulting with a licensed tax professional or CPA to obtain final tax advice tailored to your needs
Why Rental Property Tax Deductions Matter in Sacramento
Sacramento landlords face rising maintenance costs, insurance increases, and tightening local regulations. The good news? Many of these expenses are fully tax-deductible.
Rental property deductions allow you to:
- Reduce taxable rental income
- Improve annual cash flow
- Offset repairs, maintenance, and capital improvements
- Lower long-term tax liabilities
And with proper bookkeeping, these deductions can add up to thousands of dollars in savings each year.
How Rental Property Deductions Work
The IRS allows landlords to deduct expenses that are:
- Ordinary – common in the rental industry
- Necessary – helpful and appropriate
- Directly related to managing or maintaining the property
These deductions are reported on Schedule E: Supplemental Income and Loss.
Most Sacramento landlords qualify for deductions such as:
- Mortgage interest
- Property taxes
- Insurance
- Repairs and maintenance
- Property management fees
- Depreciation
How Rental Income Is Taxed
You must report the following:
- Monthly rent
- Late fees
- Reimbursements (utilities, repairs)
- Lease termination fees
Security deposits only count as income if withheld for unpaid rent or damage.
Taxable rental income =
Rental income – deductible operating expenses
Sacramento County Property Tax Deadlines
- 1st Installment: November 1
- Late After: December 10 (10% penalty)
- 2nd Installment: February 1
- Late After: April 10 (10% penalty + $15 fee)
- Unsecured Taxes: Due August 31
- Fiscal Year Ends: June 30 (default penalties apply)
Sacramento County does not send reminders for the second installment.
The Ultimate Rental Property Tax Deduction Checklist for Sacramento Landlords (With Descriptions)
Below is a complete list of deductible expenses with brief explanations for each.
Financial, Legal & Administrative Deductions
- Accounting & Bookkeeping – Professional financial tracking services.
- Advertising & Marketing – Listings, photography, signage, digital ads.
- Business Entity Pass-Through Deduction (QBI) – Up to 20% deduction on eligible rental income.
- Closing Costs (Deductible Portions) – Loan interest, prorated taxes, certain fees.
- Credit Card Interest (Rental Use Only) – For rental-related purchases.
- Education & Training – Books, courses, seminars.
- Licenses & Registration Fees – LLC fees, business licenses, local rental registrations.
- Office Supplies – Paper, ink, folders, mailing supplies.
- Software Subscriptions – Property management or accounting software.
- Tax Preparation Fees – Schedule E and return preparation.
Leasing & Tenant Placement Deductions
- Leasing Fees – Paid to agents or managers for tenant placement.
- Tenant Screening Fees – Background checks, credit reports.
Property Management Deductions
- Property Management Fees – Paid to Tower Bridge Property Management.
- Independent Contractors & Consultants – Repairs, landscaping, cleaning, etc.
- Professional Cleaning Services – Turnover or deep cleaning.
Mortgage, Insurance & Financing Deductions
- Mortgage Interest – A major deduction for most landlords.
- Mortgage Insurance Premiums – PMI/MIP payments.
Depreciation Deductions
- Building Depreciation – Over 27.5 years for residential rentals.
- Capital Improvement Depreciation – Roofs, HVAC, windows, flooring, appliances.
- Short-Life Property Depreciation – Appliances, carpets, fencing (5–15 years).
Maintenance, Repairs & Property Services
- Maintenance – Routine upkeep such as filters, landscaping, minor fixes.
- Repairs – Fixes that restore, not improve, the property.
- Landscaping & Lawn Care – Mowing, pruning, irrigation work.
- Pest Control – Preventive or emergency service.
- Mold Remediation – Removal and remediation.
- Trash Collection – Garbage and recycling services.
- Security Systems & Alarms – Installation + monitoring.
- Snow Removal (If Applicable) – Rare in Sacramento but deductible.
Utilities & Operating Costs
- Utilities – Water, electricity, gas, sewer, trash, internet (if landlord-paid).
- Cell Phone & Internet (Business Portion) – Only the business-use share.
Insurance Deductions
- Landlord Insurance – Dwelling, liability, fire, loss of rent.
- Umbrella Liability Insurance – Additional coverage.
Travel & Mileage Deductions
- Local Travel – Mileage to the property for inspections, repairs, or rent collection.
- Long-Distance Travel – Airfare, hotels, car rentals, meals for out-of-area rentals.
Losses & Unpaid Rent
- Vacancy-Related Expenses – Utilities, cleaning, lawn care during vacancy.
Note: Unpaid rent is not deductible for cash-basis landlords.
Special Rules for Sacramento Landlords
- Your own labor is not deductible.
- Repairs = deductible. Improvements = depreciated.
- Mixed-use (personal + rental) properties require prorated expenses.
Bookkeeping Tips for Maximizing Deductions
- Use separate bank accounts
- Store all receipts (digital + physical)
- Track mileage with an app
- Keep an updated depreciation schedule
- Work with a Sacramento-based real estate CPA
What Tower Bridge Property Management Provides at Tax Time
Tower Bridge Property Management makes tax season easier by providing:
✔ IRS-required end-of-year documents — including Form 1099
Your accountant gets everything needed to file accurately and on time.
✔ A detailed year-end cash flow report
Shows all revenue and expenses processed through Tower Bridge during the year.
This simplifies tax preparation and ensures accurate deductions.
Partner With Tower Bridge Property Management
Managing a rental property shouldn’t be overwhelming. Tower Bridge Property Management provides:
- Tenant placement
- Rent collection
- Maintenance coordination
- Inspections
- Financial reporting
- Year-end tax documentation
- Local Sacramento expertise
Want to maximize your deductions and simplify tax season?
Contact us today to learn how we can help you get the most out of your Sacramento rental property.
