Year-End Tax Prep for Rental Property Owners
Owning rental property in North Idaho comes with plenty of rewards, from monthly income to long-term appreciation. But one of the often-overlooked benefits is the opportunity to maximize tax savings when the year comes to a close.
As 2026 approaches, now is the time to make sure your books are in order, review your deductions, and connect with your CPA, preferably before December 31st. A little planning can make a big difference in your bottom line.
1. Get Your Books in Order
Accurate, up-to-date records are the first step of smart tax planning. This includes:
Rental income – Every payment you’ve received from tenants.
Operating expenses – Property management fees, utilities you’ve paid, insurance, and HOA dues are just some examples of operating expenses you should be getting in order.
Capital improvements – Major upgrades that add value to the property, which may be depreciated over time. Some examples would be adding an AC unit or replacing the roof.
Repairs and maintenance – Day-to-day upkeep that can typically be deducted in the year paid.
If you use property management software or accounting tools, we recommend running a year-to-date report. If you’re tracking manually, make sure every expense is logged and backed by receipts.
2. Meet With Your CPA Before The Year Ends
Every property owner’s tax situation is different depending on location, income level, and portfolio size. Your CPA can help you:
Review your depreciation schedule and determine if you should accelerate certain expenses this year.
Decide whether to complete repairs before year-end or defer them to the next tax year.
Identify any 1031 exchange opportunities if you’re planning to sell.
Ensure you’re in compliance with both federal and Idaho state tax laws.
Meeting before the year closes gives you time to make adjustments, something you can’t do once January arrives.
3. Understand Deductible Expenses
The IRS offers generous deductions for rental property owners who maintain their properties. Some of the most common include:
Mortgage interest
Property taxes
Property management fees
Repairs and routine maintenance
Travel expenses for property-related trips
Insurance premiums
Tip: Keep repairs and maintenance separate from improvements in your records, they are taxed differently.
4. Consider Strategic Repairs or Upgrades
If your CPA determines you could benefit from additional deductions this year, consider making needed repairs before December 31st.
Examples include:
Repainting or patching walls
Servicing HVAC systems
Replacing broken fixtures or appliances
Not only does this keep your property in great shape (helping you attract and retain tenants), but it can also reduce your taxable income for the year.
5. Take Advantage of Depreciation
Depreciation is one of the biggest tax advantages of owning rental real estate. Even if your property is increasing in value, the IRS allows you to deduct a portion of its cost each year.
Your CPA can help ensure your depreciation schedule is accurate and you’re capturing every eligible deduction.
6. Keep Personal and Rental Finances Separate
If you haven’t already, use a dedicated bank account for rental property transactions. This simplifies bookkeeping, makes audits less stressful, and ensures you don’t miss deductible expenses.
Final Thoughts
Being a good landlord isn’t just about maintaining your property and keeping tenants happy, it also means running your rental properties like a business. The government rewards responsible property owners with deductions and tax advantages that can significantly boost your returns.
Before the year ends, take the time to organize your records, review your financials, and meet with a trusted CPA. With a little preparation, you can start the new year confident that your rental property is working for you in every way possible.
