Rent and taxes: Is rent tax deductible?

It’s no secret that rent can chew up a portion of your paycheck. For this reason, you might wonder if there is a rent tax deduction or a tax credit for paying rent to help offset the cost. Let’s work through how rental payments affect your taxable income by answering these questions:

• Is rent a tax deduction?
• Who can deduct rent on taxes?
• Is there a tax credit for paying rent?

For the purposes of this post, let’s define a couple of terms related to rent and taxes.

• Rent is the amount of money you as an individual pay for the use of property that is not your own. It’s a regular payment, usually made monthly, that allows you to live or work in the space without owning it.
• A rent expense refers to the total cost of using rental property for each reporting period. 

Is rent a tax deduction?

So, can you claim rent on your taxes or is rent a deduction on taxes? Many renters ask if there are any circumstances where they can deduct rent payments on their federal income tax return. In most cases, rent is not a deductible expense for individual taxpayers as permitted by the tax laws and Internal Revenue Service (IRS). There are certain exceptions for independent business owners and rental property owners, which we’ll outline next.

Who is rent deductible for?

If you are just a tenant, and you use the property for personal use, such as for your living arrangement, you can’t deduct rent paid on your federal income tax return. However, there are certain exceptions for independent business owners and rental property owners. Let’s walk through the specifics to determine if a rental expense is deductible:

Independent contractors / small business owners

If you are self-employed and use your home for your trade or business, you may be able to deduct a portion of your rental cost on your tax return with the home office deduction. The amount you can deduct is based on how many square feet of the property is used for your business.

There are certain requirements the business use of your home must meet, but renters (and homeowners) are potentially eligible for the home office deduction. If you rent an external, designated office space (like an office, studio, or co-working space), your rental expense will also qualify for a tax deduction.

Rental property owners

Rental property owners can deduct many rental property expenses (in the tax year they’ve paid them) to help offset their taxable income. The following expenses can be deducted:

• Advertising
• Auto and travel
• Cleaning and maintenance
• Commissions
• Insurance
• Legal and other professional fees
• Mortgage interest paid to banks and other financial institutions
• Repairs
• Real property tax
• Utilities
• Depreciation expense
• Other expenses specific to your rental—Ex: condo fees or landscaping expenses

Learn more rental income tax tips.

Tax credit for paying rent

“Can I claim my rent on state taxes?” is another question we get. While rent deductions are generally not allowed federally, there are some state-specific circumstances that offer a tax benefit for renters. Twenty-two states offer a Renter’s Credit, which certain taxpayers can claim based on age, citizenship/residency, disability, tax dependency, income, and total rent payments. If you qualify, this tax credit can reduce the amount of tax you owe and, in some cases, can increase your state tax refund.

States offering a Renter’s Credit include:

• Arizona
• California
• Colorado
• Connecticut
• District of Columbia (DC)
• Hawaii
• Indiana
• Iowa
• Maine
• Maryland
• Massachusetts
• Michigan
• Minnesota
• Missouri
• Montana
• New Jersey
• New Mexico
• New York
• North Dakota
• Pennsylvania
• Rhode Island
• Utah
• Vermont
• Wisconsin

Get help with tax preparation and applicable rent-related tax benefits

If your business activities allow you to claim rent-related expenses as a deduction or if you’re in a state that allows for a credit, we can help!

Whether you choose to file with a tax professional or file with H&R Block Online, you can rest assured that we’ll help you reduce your overall tax liability and get you the biggest refund possible this tax season.