The IRS classifies rental income as passive activity under IRC 469. Passive losses can only offset passive income - not your W-2 salary or business income. This is why TurboTax/CPA shows your rental losses as "suspended."
Three ways to unlock your rental losses:
All ordinary and necessary expenses for managing, conserving, and maintaining rental property are deductible. This includes property management fees (typically 8–12% of rent), repairs and maintenance, landscaping, snow removal, pest control, cleaning between tenants, locksmith fees, and any other costs directly related to keeping the property in rentable condition.
A landlord paying $4,800/year in property management fees on a $4,000/month rental deducts the full amount, saving $1,440–$1,920 in taxes.
Repairs are immediately deductible; improvements must be depreciated. The line between repair and improvement matters — a new roof is an improvement, patching a roof is a repair.
Bookkeepers working from home can deduct the home office space used exclusively for client work — typically worth $1,500–$4,000 per year using the actual expense method. Vehicle mileage to client offices, bank runs, and networking events is deductible at 70 cents per mile. A bookkeeper driving 5,000 business miles deducts $3,500.
A freelance bookkeeper using 12% of their home for bookkeeping deducts $2,400/year in home office expenses, plus $2,010 in vehicle mileage (3,000 miles x $0.67), saving $1,633 at 37%.
Freelance bookkeepers working from home can deduct both home office and vehicle expenses. Home office: calculate the percentage of your home used for bookkeeping and apply to rent/mortgage interest, utilities, and insurance. Vehicle: deduct mileage for client meetings, bank runs, and business errands at 67 cents/mile. A dedicated home office also makes all miles from home to client locations deductible. Internet and phone (business-use percentage) are also deductible.
Home health care businesses incur significant vehicle costs — caregivers drive to client homes, supervisors conduct home visits, and owners travel to meetings and training. The 2026 IRS standard mileage rate is 70 cents per mile for business use. Agencies can reimburse caregivers for mileage through an accountable plan, making the reimbursement tax-free to the employee and fully deductible to the business. Alternatively, actual vehicle expenses (fuel, insurance, maintenance, depreciation) can be deducted based on business-use percentage.
A home health care agency owner driving 20,000 business miles per year deducts $14,000 at the 2026 rate of 70 cents per mile, saving $5,180 in taxes at 37%.
Use a mileage tracking app (MileIQ, Everlance, TripLog) for every caregiver and supervisor. Reimburse through an accountable plan — this keeps the reimbursement off the caregiver's W-2 and gives the agency a full deduction.
Real estate agents can deduct every mile driven for business: showing properties, meeting clients, attending closings, visiting inspections, and driving to the office. At 70 cents per mile in 2026, an agent driving 20,000 business miles deducts $14,000. Use MileIQ or Everlance to track mileage automatically. The standard mileage rate beats actual expenses for most agents.
A real estate agent driving 25,000 business miles/year for showings, listings, and client meetings deducts $16,750 (25,000 x $0.67), saving $6,198 at 37%.
Enter your email for instant access to MERNA strategy notes, IRS red flag warnings, action steps, and implementation guide.
Property management software like AppFolio, Buildium, Rent Manager, and TenantCloud is fully deductible as a business expense. These platforms typically cost $1,200–$6,000 per year and are 100% deductible under IRC §162. Also deduct QuickBooks, DocuSign, and any tenant screening service subscriptions.
A property manager paying $3,600/year for AppFolio, $1,200 for DocuSign, $600 for QuickBooks, and $480 for tenant screening tools deducts $5,880, saving $2,176 at 37%.
Enter your email for instant access to MERNA strategy notes, IRS red flag warnings, action steps, and implementation guide.
Property managers can deduct state real estate license renewal fees, property management license fees, continuing education credits, and professional association dues (NARPM). These fees typically run $500–$2,000 per year and are fully deductible under IRC §162 as ordinary and necessary business expenses.
A property manager paying $800/year in NARPM dues, $400 in license renewal, $300 in CE courses, and $500 in E&O insurance deducts $2,000, saving $740 at 37%.
Enter your email for instant access to MERNA strategy notes, IRS red flag warnings, action steps, and implementation guide.
Cost Segregation generates more first-year deductions than any other strategy in the tax code.
REPS status can turn passive losses into unlimited active deductions — but requires 750+ hours documented.
The 1031 exchange can be chained indefinitely — some investors have deferred gains for 30+ years.
This write-off is commonly used by the following taxpayer profiles. Click to see all strategies for your situation.
Get answers to the most frequently asked tax questions for your profession.
Check any item instantly — G-Wagon, vacation, iPhone, home gym, and 70+ more.
