How To Simplify Property Management Tax Deductions For Rental Homes

Owning a rental home in the U.S. means more than just collecting rent, it also means navigating the complexities of taxes. Like any business, rental income is taxable, and the good news is that most of the costs you incur to keep your property running are tax deductible. Whether you’re managing everything yourself, hiring a traditional property manager, or working with industry disruptors like Belong, expenses such as tenant placement, maintenance, and professional services generally qualify.

But tax rules are rarely straightforward. Let’s dig deeper into what landlords should know about property management deductions, and how you can simplify tax season while maximizing your benefits.

Are Property Management Fees Tax Deductible?

In short, yes. If you own a rental property that isn’t used personally by you or your family, the IRS considers it a business or investment. That means ordinary and necessary expenses, like property management fees, are deductible on Schedule E (Supplemental Income and Loss).

This applies whether you pay a percentage-based fee, flat-rate tenant placement costs, or bundled service fees.

That also means Belong’s fees are deductible. While Belong is not a traditional property management company, it still performs essential management functions: coordinating repairs, screening tenants, managing rental income, and ensuring the property is maintained. Because of this, homeowners can deduct Belong’s service fees and even costs paid to Belong’s vetted maintenance professionals.

Belong vs. Self-Management: Which Is Better for Taxes?

Some landlords wonder whether managing their property themselves can provide a tax edge. Here’s the breakdown:

Self-Management

• Material participation potential: If you spend 500+ hours annually on management or qualify as a real estate professional, your rental activity may be treated as non-passive. This lets you offset losses against other types of income and avoid the 3.8% Net Investment Income Tax.
  
  
• High record-keeping burden: You’ll need precise records of every dollar spent, down to supplies, mileage, and contractor invoices.
  
  
• Employer responsibilities: Hiring individuals directly (instead of licensed contractors) could make you an employer, with payroll tax obligations.
  
  

End to End Management with Belong

• Passive activity classification: Most rentals with property managers are considered passive, but you can still deduct all management-related expenses.
  
  
• Streamlined deductions: Belong consolidates income and expense reports, so you don’t need to manually track every receipt.
  
  
• Guaranteed rent advantage: With predictable income, there are fewer surprises when reporting rental earnings at tax time.
  
  

Key takeaway: DIY management can create tax advantages for full-time landlords willing to track 500+ hours of work. For most investors, however, outsourcing with Belong offers a simpler, safer, and more efficient path.

Active Participation vs. Passive Activity

The IRS places landlords into three levels of involvement:

Passive Activity:

• Rental property treated as an investment.
• Losses can only offset passive income but may carry forward until you sell the property.

Active Participation:

• You make key decisions, such as approving new tenants or choosing a property manager.
• May qualify you to deduct up to $25,000 of passive losses against other income (subject to income limits).
  
  

Material Participation (Real Estate Professional):

• Requires 500+ hours per year or your primary occupation being real estate.
• Rental losses can offset any type of income but require significant time commitment and documentation.

Most Belong homeowners fall into the active participation category, since they’re still involved in approving key decisions while Belong handles daily operations.

How Belong Simplifies Tax Season

Rental property deductions can get complicated, especially if you own multiple homes. 

Belong makes it easy by:

• Consolidating records: Year-end earnings statements show all payable and receivable transactions.
  
  
• Providing tax-ready documents: Access 1099 forms directly through your Belong account.
  
  
• Tracking maintenance costs automatically: All repairs completed by Belong’s network of 10,000+ vetted professionals are recorded in the app.
  
  
• Offering concierge support: Help with locating documents and answering expense-related questions.
  
  

This means no scrambling at the end of the year, no messy spreadsheets, and no missed deductions.

Final Thoughts

Property management fees, including Belong’s, are tax deductible for U.S. rental homeowners. While self-management may create opportunities for real estate professionals to treat income as non-passive, most landlords find that professional management provides a clearer path, simpler record-keeping, and fewer tax headaches.

Belong makes tax season seamless by consolidating everything in one place, giving homeowners confidence that they’re maximizing deductions without the stress of paperwork.

FAQ

Can I deduct Belong's fees on my taxes?

Yes. Belong’s service fees and maintenance charges are considered rental expenses and can be deducted on Schedule E.

What’s the difference between active participation and material participation?

Active participation requires involvement in major decisions but far fewer hours. Material participation requires 500+ hours annually and qualifies you as a real estate professional.

What if I sometimes use my rental property personally?

If you use the home personally for more than 14 days a year, or more than 10% of the total rental days, the IRS may classify it as a personal residence. In this case, deductions are limited.

Can I deduct accountant fees?

Yes. Professional fees for CPAs, attorneys, and even bookkeeping services are deductible.