Are Property Management Fees Tax Deductible?

Owning rental property comes with exciting opportunities for building wealth, but also with complex tax implications. One of the most common questions landlords ask is: Are property management fees tax deductible?

The short answer is yes. But there are important rules, exceptions, and strategies to understand if you want to maximize your deductions and avoid IRS pitfalls. This guide breaks down exactly how property management fees fit into your tax return, what documentation you need, and how working with a service like Belong can make tax season painless.

Why Property Management Fees Matter for Your Taxes

Cash flow impact: Property management fees typically range between 8%-12% of monthly rental income. That’s a meaningful expense for landlords. Deducting these fees directly reduces taxable income, keeping more cash in your pocket.

IRS audit readiness: The IRS explicitly recognizes property management fees as deductible rental expenses, provided the property is treated as a business. However, landlords must maintain clear documentation to avoid disputes during an audit.

Ease of claiming: Unlike complicated deductions such as depreciation, management fees are straightforward to track. Invoices, monthly statements, and year-end summaries make reporting simple, especially when working with a professional service.

Are Property Management Fees Tax Deductible?

Yes. According to IRS rules, property management fees fall under ordinary and necessary expenses for operating a rental property. This means they can be deducted on Schedule E (Supplemental Income and Loss) of your tax return.

But there are conditions:

• You must be receiving rental income from the property.
  
  
• You must be actively involved in rental operations (even if a manager handles day-to-day tasks).
  
  
• The property cannot be classified as a personal residence (e.g., rented fewer than 14 days per year or used for personal stays exceeding the IRS thresholds).
  
  

What Counts as “Actively Involved”?

The IRS distinguishes between “active participation” and “material participation.” Most landlords only need to meet the active participation standard to deduct management fees.

Examples of active participation include:

• Communicating with the property manager about repairs or tenant issues.
  
  
• Making key decisions (approving maintenance, setting rental terms).
  
  
• Reviewing financial reports and rental statements.
  
  
• Staying engaged in major property-related decisions, even if not handling day-to-day tasks.
  
  

Important: Passive investors who simply collect returns without involvement may not qualify for this deduction. Always consult IRS Publication 925 or a tax professional for detailed guidance.

Do Belong’s Fees Qualify?

Yes. Belong’s fees are considered rental expenses, making them deductible. Homeowners working with Belong stay actively involved by:

• Regularly communicating with the Belong team about property decisions.
  
  
• Reviewing financial statements provided through the platform.
  
  
• Receiving rental income documented with year-end earnings reports and IRS Form 1099.
  
  

This ensures Belong homeowners can deduct fees confidently while enjoying a streamlined tax preparation process.

Other Key Property Management–Related Deductions

If you qualify to deduct property management fees, you can likely deduct a range of other expenses tied to operating your rental:

1. Repairs and Maintenance: Fixing a leaky roof, repainting walls, or replacing broken appliances (not improvements, which are depreciated).
   
   
2. Insurance Premiums: Including landlord, liability, and hazard policies.
   
   
3. Property Taxes: Deductible on Schedule E, but subject to apportioning if the property is mixed-use.
   
   
4. Professional and Legal Services: Fees for CPAs, attorneys, or bookkeeping services.
   
   
5. Travel and Mileage: Trips to your rental for inspections, repairs, or meetings with your manager.
   
   
6. Utilities and HOA Dues: If paid by the landlord and essential for operations.
   
   
7. Depreciation: Spreading out the cost of the property (excluding land) over its useful life.
   
   

Pro Tip: Each deduction has unique documentation requirements. For example, repairs need invoices, while depreciation requires a depreciation schedule.

Documentation You’ll Need for Deducting Management Fees

If the IRS audits you, you must prove your deductions. To stay prepared, keep:

• Invoices or monthly statements from your property manager.
  
  
• Year-end summaries (Belong provides these in an earnings statement format).
  
  
• Form 1099-MISC/NEC showing rental income and payments.
  
  
• Receipts for repairs, maintenance, utilities, and insurance.
  
  
• Mileage logs for trips related to property management.
  
  

“Meticulous record-keeping is essential for claiming all eligible write-offs accurately.” (IRS Guidance)

How Belong Simplifies Tax Season for Homeowners

One of Belong’s standout benefits is tax-season support:

• Downloadable earnings statements that consolidate all income and expenses.
  
  
• Easy access to 1099 forms through your online portal.
  
  
• Concierge assistance for finding documentation and clarifying deductible expenses.
  
  

This level of organization reduces the stress of tax filing and improves audit readiness.

Final Thoughts

Yes, property management fees are tax deductible, and they’re one of the simplest deductions landlords can claim. Beyond fees, landlords can benefit from a wide range of deductions that improve cash flow, profitability, and long-term returns.

The key is staying IRS-compliant with good documentation and leveraging services like Belong that simplify record-keeping. Always consult a tax professional for personalized guidance, but with the right approach, your rental property can remain both profitable and tax-efficient.

Frequently Asked Questions

Are property management fees always deductible?

Yes, if your property produces rental income and you are actively involved. Exceptions apply for personal residences or properties rented fewer than 14 days annually.

Can I deduct Belong’s fees?

Yes. Belong’s fees qualify as deductible rental expenses.

What other landlord tax deductions exist?

Common deductions include mortgage interest, property taxes, insurance, repairs, depreciation, and travel expenses.

How do I report these deductions?

Use Schedule E (Form 1040) to report rental income and related expenses.

What’s the difference between a repair and an improvement?

Repairs restore the property to its original condition (deductible immediately), while improvements increase value or extend lifespan (deducted through depreciation).

Find out if your rental home qualifies at belonghome.com/homeowners.