Tax Deductions Every Denver Landlord Should Be Tracking Right Now
October is when the landlords who are on top of their finances are already reviewing their year-to-date numbers. The ones who aren't? They'll be scrambling in February, handing their CPA a shoebox of receipts and wondering why their return looks the way it does.
We're not tax advisors — and nothing here is a substitute for working with a qualified CPA who handles real estate. But we do manage a lot of Denver rental properties, which means we see firsthand how much money landlords leave on the table simply because they didn't know to track something, or didn't keep the right documentation.
Here's a plain-language tour of the deductions most Denver landlords have access to — and a nudge to get your records organized before year-end.
The Big One: Depreciation
Depreciation is the most significant tax benefit available to rental property owners, and the one most frequently underutilized by newer landlords.
The IRS allows you to deduct the cost of your residential rental property (the building — not the land) over 27.5 years. That means if your Denver rental is worth $400,000 and the land is valued at $75,000, you can deduct roughly $11,800 per year ($325,000 ÷ 27.5) in depreciation — even if the property has appreciated in value and you haven't spent a dime.
This is a paper deduction that reduces your taxable rental income without touching your cash flow. For landlords in higher income brackets, it can be the difference between owing taxes on rental income and not.
A few important nuances:
- You must have your land and building values properly allocated (your property tax assessment is a common starting point, though a cost segregation study can do this more precisely)
- Depreciation is "recaptured" at sale — you'll owe tax on the depreciation you've taken, which is why a 1031 exchange can be powerful at that point
- If you've done significant capital improvements, those may be depreciable separately on an accelerated schedule
- Your CPA should be tracking this for you. If they're not, ask specifically about it.
Operating Expenses: Track Everything
The day-to-day costs of running a rental property are generally deductible. The key is keeping receipts and categorizing them properly. Common deductible operating expenses include:
Property management fees. If you work with a property management company, those fees are fully deductible as a business expense. For most Denver landlords using full-service management, this is a meaningful number — and the management pays for itself in ways that are harder to quantify (avoided vacancies, faster maintenance, better tenant quality), but the deduction is straightforward.
Repairs and maintenance. A distinction worth understanding: repairs (fixing what's broken) are generally deductible in the year incurred. Improvements (adding value or extending the property's useful life) are capitalized and depreciated. Replaced a broken water heater? Repair. Converted the basement to a rental suite? Improvement. The line isn't always obvious — your CPA can guide you.
Insurance premiums. Your landlord insurance policy (and any endorsements — flood, sewer backup, umbrella) is deductible.
Property taxes. Denver-area property taxes are deductible as a rental expense. Note: the $10,000 SALT cap that affects homeowners doesn't apply the same way to rental properties — rental property taxes are deducted on Schedule E, not Schedule A.
Mortgage interest. Interest paid on your rental property mortgage is fully deductible against rental income. This is typically one of the largest deductions for leveraged landlords.
Professional services. CPA fees for your rental tax return, attorney fees for lease review or an eviction, property inspection fees — all deductible.
Advertising and marketing costs. Zillow listing fees, photography for your listing, signage — all deductible in the year incurred.
Travel. This one surprises some landlords. If you drive to your Denver rental property for legitimate business purposes — to show the unit, handle a maintenance issue, conduct an inspection — you can deduct the mileage at the IRS standard rate (check irs.gov for the current rate). Keep a mileage log. It doesn't need to be fancy — date, destination, and purpose in a notes app is fine.
Home office deduction. If you have a dedicated space in your home used exclusively for managing your rental business, there may be a home office deduction available. This is an area where the rules are specific and documentation matters — ask your CPA.
The Passive Activity Rules: Know Where You Stand
Rental income is generally classified as "passive" income by the IRS, which means rental losses can only offset other passive income — not your W-2 wages — in most cases.
There's an important exception: if your modified adjusted gross income (MAGI) is below $100,000, you may be able to deduct up to $25,000 in rental losses against ordinary income, provided you "actively participate" in managing the property (which has a relatively low threshold — making management decisions qualifies). This phases out completely above $150,000 MAGI.
For higher-income landlords, the losses carry forward to future years or offset gains at sale. This is why some investors pursue Real Estate Professional status — a designation that allows rental losses to offset ordinary income without limit, but requires meeting specific hour thresholds that the IRS takes seriously. The IRS Publication 925 covers passive activity rules in detail.
A Year-End Checklist
If you want to get ahead of tax season, here's what to pull together now:
- YTD rent collected (including any security deposits retained or applied)
- All maintenance and repair receipts — digital is fine, just keep them organized by property
- Property management statements if you use one
- Mortgage interest statements from your lender
- Property tax bills paid in 2026
- Insurance premiums paid in 2026
- Mileage log for property-related travel
- Any capital improvement projects completed this year (invoices and a description of what was done)
Pull this together now, hand it to your CPA in November or December, and you'll be in a much better position than the February-rush version of yourself.
If you're working with a property management company and aren't sure what documentation they can provide for tax purposes, ask them directly. At My Haven, we provide detailed monthly owner statements that make tax prep straightforward. Call us at 303-228-7800 or visit rentmyhaven.com to learn more.
My Haven is a full-service property management company proudly serving the Denver metro area.
