Do Renters Qualify for a Tax Deduction?

renters tax deductions

The truth is there is no federal tax deduction for monthly rent – but depending on where you live, you might be able to deduct your payments on your state tax return. If you’re looking for tax breaks, here are some that you might be able to take as a renter.

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 cost of damage to your property from fire, theft, flood or other accidents or natural disasters if your insurance provider does not reimburse you for the losses.

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 percentages.

Renter’s Tax Credit

Some states offer a credit for renters. It is based off how much estimated rent landlords charge to cover property taxes. To see if your state honors this credit, contact your state directly.

Charitable Giving

The amount you can claim for charitable deductions increased under the Tax Cuts and Jobs Act. Donations are now deductible up to 60% of your adjusted gross income.

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 student in college, you might be able to claim these credits as well.

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.

Self-Employed Income

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.

Read also: 11 Deductions for Rideshare Drivers.

Read also: The Complete Tax Guide for Airbnb Hosts.

Read also: 8 Deductions for Creative Freelancers.

This article is up to date and accounts for tax law changes for tax year 2018 (tax returns filed in 2019). Learn more about tax reform enacted under the Tax Cuts and Jobs Act here.

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