While a small number of tax credits and deductions apply to homeowners only, there are several breaks that you can also claim if you’re a renter.
Do renters qualify for a tax deduction?
Yes, but there are some qualifications you must meet to be eligible for certain tax deductions. Some basic requirements include:
- Residential Status – You must be a resident of the state in which you are renting property.
- Your name must be on the lease, meaning you are legally responsible for the rental payments.
- Tax Filing Status – You cannot be claimed as a dependent on someone else’s tax return.
- The property owner pays taxes on the place you’re renting.
1. Property Tax
Check to see if you pay property taxes as part of your lease agreement. If you do, you can deduct that portion of your rent or any property tax you pay directly. Additionally, you can deduct property losses or damage due to a federally declared natural disaster.
2. Home Office
If you use a portion of your rental home as your principal place of business, you could be eligible for the home office deduction. The amount you can deduct depends on the size of your space and whether you choose the simplified or regular method to calculate your expenses.
The simplified method lets you deduct $5 per square foot for up to 300 square feet. The regular method bases your deduction on the percentage of your home’s square footage used as office space.
3. Renter’s Tax Credit
Some states offer a tax credit for renters. It is based on how much estimated rent landlords charge to cover property taxes. To see if your state honors this credit, contact your state’s department of revenue.
4. Charitable Giving
If you itemize deductions on your taxes, you can deduct charitable contributions worth up to 60% of your adjusted gross income. Here are the rules for donating items like clothing and household goods.
5. Education Credits
If you are in college while renting your apartment or house, consider claiming the American Opportunity Credit or Lifetime Learning Credit. You can only claim one of these credits per year, so choose the one that best fits your situation. If you are a parent with a college student, you might also be able to claim these credits.
6. Student Loan Interest Deduction
College is expensive, especially if you are also paying rent. If you are working on your degree or you’re working to pay it off, you can deduct up to $2,500 for the interest you pay on your student loans. Find out if you qualify for the student loan interest deduction.
7. Self-Employed Deductions
When it comes to paying rent, every little bit helps. For lots of Americans, that means extra income from a side gig. If you receive a 1099 from an employer, the IRS considers you self-employed.
In that case, there are several small business deductions you could take if they are necessary for your job. TaxSlayer Self-Employed finds all the breaks you deserve and makes it easy to file your return as a renter and a side hustler. Read also: Self-Employed Tax Deductions with Examples
Tax Deductions for Renters by State
Many states offer tax breaks to ease the financial burden for renters and prevent double taxation if your landlord includes property taxes in your rent. The requirements by state are listed below:
- California: If you paid rent for at least half of the year and make less than $49,220 for single filers or married filing separately (or $98,440 for married filing jointly, head of household, or qualified widower), you may be eligible for a tax credit of $60 – $120.
- Hawaii: Hawaiian renters must earn less than $30,000 and have paid at least $1,000 in rent toward their principal residence throughout the year to qualify for a tax credit.
- Indiana: Renters can deduct up to $3,000 (or $1,500 if married filing separately) if the place you rented was your principal residence and the property was subject to property tax.
- Maine: A tax credit is subject to household size and income limitations.
- Maryland: View this resource to determine your eligibility for a tax credit.
- Massachusetts: For renters whose principal residence is in-state, they can deduct up to 50% of rent paid as long as it’s under $3,000.
- Michigan: You may be eligible for a tax credit if you meet certain qualifications. Complete this worksheet to determine your eligibility.
- Minnesota: You may be eligible for a tax refund if your household income is less than $69,520 and you meet other requirements listed on the state’s department of revenue site.
- New Jersey: You may qualify for a credit or deduction if you meet these requirements.
- New York: Depending on your age, income, and other requirements, you may be eligible for a credit worth up to $375 if your rent was $450 or less.
- Vermont: A rebate is available for renters who meet specific income requirements.
- Washington D.C.: Renters may be eligible for a credit worth up to $750 if their income is $20,000 or less.
Frequently Asked Tax Deductions Questions for Renters
Is there a tax deduction for renters?
You may be eligible for a tax credit or deduction depending on your income level, filing status, and place of residence. Check with your state’s department of revenue website to confirm your eligibility.
Can renters claim a tax deduction for rent application fees?
No, unfortunately you cannot claim a tax deduction for rental application fees. However, some landlords offer to waive application fees. Ask your prospective landlord about their rental policies.
How do you qualify for renters’ deductions on taxes?
Each state has specific qualifications for rent deductions and credits. Check your state’s department of revenue website to see if you qualify.
For more information about tax breaks for renters and homeowners, check out our infographic below.