If you have a rental property or side consulting gig, you're likely leaving money on the table every year. Not because you're doing anything wrong — but because you're not tracking the right expenses.

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Most people know the obvious deductions (mortgage interest, business travel), but the real tax savings come from the dozens of smaller, often-overlooked expenses that add up to serious money. Let's walk through what you should actually be tracking for both rental properties (Schedule E) and self-employment income (Schedule C).

Schedule E: Rental Property Deductions That Actually Matter

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The Big Ones Everyone Knows

Mortgage interest and property taxes: Yes, these are deductible. But here's what most people miss — you can only deduct the portion that relates to rental use. If you're renting out part of your home, you need to calculate the percentage properly.

Insurance premiums: Not just your landlord policy, but also umbrella insurance that covers the rental property. Track these monthly, not just at renewal.

Property management fees: Whether you use a management company or pay someone to handle maintenance coordination, those fees are fully deductible.

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The Ones Most People Forget

Travel to and from your rental property:

• Mileage at the standard rate (70 cents per mile in 2025)
• Parking fees and tolls
• If the property is far away, even flights and hotels for property inspections or maintenance oversight

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Real-world miss: You drive to your rental property 24 times a year for inspections, maintenance coordination, and tenant meetings. That's potentially 500+ miles. At 70 cents per mile, that's $335+ you're not deducting.

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‍Home office deduction for rental management: If you have a dedicated space where you manage your rental business (reviewing applications, handling bookkeeping, coordinating repairs), you can take a home office deduction. This is separate from the rental property itself. Additional rules may apply.

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‍Calculation: If your home office is 150 sq ft and your home is 2,000 sq ft, that's 7.5% of your home expenses (utilities, insurance, HOA fees) that become deductible.

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‍Professional services beyond your accountant:

• Lawyer fees for lease reviews or eviction proceedings
• Real estate agents for finding tenants
• Photographers for listing photos
• Background check services
• Online listing platform fees (Zillow, Apartments.com, etc.)

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‍Repairs vs improvements (this is crucial): Repairs are immediately deductible. Improvements must be depreciated over time. Here’s the difference:

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‍Repairs (deduct now):

• Fixing a broken window
• Patching holes in walls
• Repairing a leaky faucet
• Repainting in the same color

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‍Improvements (depreciate over time):

• Replacing all windows with upgraded versions
• Adding a bathroom
• New HVAC system
• Kitchen remodel

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‍The gray area: Replacing a roof. If it's a repair to fix leaks, potentially deductible now. If you're upgrading to a better roof system, it's an improvement. Document your reasoning.

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‍Utilities you're paying during vacancy periods:

• Water/sewer during turnover
• Electricity for showings
• Gas for heating during winter vacancies
• Internet if you maintain service for showings

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‍Advertising and tenant acquisition costs:

• Online listing fees
• Lockbox purchases
• "For Rent" signs
• Promotional materials
• Tenant screening reports

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‍The hidden deduction: Cleaning and maintenance supplies: Most landlords buy supplies throughout the year and forget to track them:

• Cleaning supplies for turnover
• Light bulbs
• Air filters
• Batteries for smoke detectors
• Pest control products
• Snow removal supplies (salt, shovels)

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‍Pro tip: Keep a dedicated credit card for rental expenses. Makes tracking infinitely easier at tax time.

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More Rental Strategies

Section 199A deduction for rental real estate: Starting in 2018, rental real estate can qualify for the 20% qualified business income deduction if you meet certain requirements (generally 250+ hours of rental services per year). This is huge if you qualify.

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Casualty and theft losses: If your property is damaged by a federally declared disaster, or if you experience theft, these losses may be deductible (though the rules got stricter after 2017).

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Depreciation acceleration: Beyond standard 27.5-year depreciation, you might be able to use cost segregation to accelerate depreciation on certain property components. For higher-value properties, this can create significant current-year deductions.

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Yes, the short-term rental loophole is an incredibly hot rental strategy - but it deserves its own article, which we’ll publish separately!

Schedule C: Self-Employment Deductions Most People Miss

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Beyond the Obvious

Everyone knows about deducting software subscriptions and client dinners. But here's where the real savings hide:

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The Home Office Deduction (Done Right)

Two methods:

1. Simplified method: $5 per square foot (up to 300 sq ft = max $1,500 deduction)
2. Actual expense method: Calculate percentage of home used for business and deduct that percentage of all home expenses

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‍What counts as home expenses:

• Rent or mortgage interest
• Property taxes
• Utilities (electric, gas, water, trash)
• Internet and phone (business portion)
• Homeowners or renters insurance
• HOA fees
• Repairs and maintenance
• Depreciation (if you own)

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‍Real numbers: If your home office is 200 sq ft in a 2,000 sq ft home (10%), and your annual home expenses are $30,000, that's a $3,000 deduction vs the $1,000 simplified method. Track actual expenses.

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‍Requirements: The space must be used regularly and exclusively for business. "Exclusive use" means nothing else happens in that space — no guest bedroom that doubles as an office.

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Vehicle Expenses Most People Undertrack

Two methods:

1. Standard mileage rate: 70 cents per mile (2025)
2. Actual expenses: Gas, insurance, repairs, depreciation (proportional to business use)

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What business miles include:

• Client meetings
• Networking events
• Bank runs for business deposits
• Post office trips for business mail
• Supply shopping (Office Depot runs)
• Coworking space commutes (if not your primary place of business)

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‍What doesn't count: Regular commuting from home to a regular workplace.

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‍The tracking problem: Most people lose thousands because they don't track miles throughout the year. Use an app (MileIQ, Everlance) or keep a mileage log.

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‍Real-world scenario: You drive 3,000 business miles per year. That's over $2,000 in deductions you're missing if you're not tracking.

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The Meals & Entertainment Rules

What's deductible:

• Business meals with clients or potential clients: 50% deductible
• Meals while traveling overnight for business: 50% deductible
• Office snacks/meals for employees: 50% deductible (used to be 100%)
• Company holiday party or team event: 100% deductible

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‍What's not deductible:

• Entertainment (concerts, sporting events, golf) — even with clients
• Your regular lunch at your desk (unless traveling)
• Lavish or extravagant meals

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‍Documentation needed:

• Who you met with
• Business purpose discussed
• Date and location
• Amount spent

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‍Pro tip: Take a photo of the receipt and immediately add a note on your phone about who/why. Makes year-end categorization much easier.

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Technology & Equipment That Adds Up

‍Immediately deductible (Section 179 depreciation, or de minimis safe harbor):

• Computers and laptops under $2,500 per item
• Phones and tablets
• Monitors and accessories
• Software subscriptions
• Online tools (Slack, Notion, Figma, etc.)
• Domain names and web hosting
• Camera equipment for content creation

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‍The de minimis safe harbor: Items under $2,500 can be immediately expensed rather than depreciated. Make sure your accountant elects this.

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Professional Development & Education

Deductible:

• Conferences and workshops related to your current business
• Online courses that improve current business skills
• Industry publications and subscriptions
• Professional association dues
• Certifications that maintain or improve current skills

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‍Not deductible:

• Education to qualify you for a new trade or business
• Courses to meet minimum requirements for your current field

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‍The gray area: MBA programs. Generally not deductible as they qualify you for a new trade, but there are exceptions if it's directly related to improving your current business.

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The Office Expenses Everyone Forgets

Small stuff that adds up:

• Printer ink and toner (easily $200-500/year)
• Paper and office supplies
• Business cards
• Postage and shipping
• Bank fees on business accounts
• Credit card processing fees
• Business license renewals
• PO Box rental

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‍Digital subscriptions:

• Email marketing platforms
• CRM software
• Accounting software
• Cloud storage (Dropbox, Google Workspace)
• Design tools (Canva, Adobe)
• Password managers
• VPN services
• Backup solutions

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Professional Services

All deductible:

• Accounting and bookkeeping
• Legal fees related to the business
• Business consultants and coaches
• Virtual assistants
• Contractors and freelancers
• Website developers
• Marketing agencies
• SEO services

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Insurance You Should Be Deducting

Business-related insurance:

• General liability insurance
• Professional liability (E&O insurance)
• Business property insurance
• Cyber liability insurance
• Health insurance premiums (if self-employed and not eligible for employer coverage)

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‍The health insurance deduction: This is actually an above-the-line deduction on Form 1040, not a Schedule C deduction, but it's huge for self-employed people. You can deduct 100% of health insurance premiums for yourself, spouse, and dependents.

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Marketing & Advertising

Often forgotten:

• Social media ad spend
• Google Ads
• Sponsored content
• Website hosting and domains
• Email marketing services
• Business listings (Yelp, Google Business)
• Logo design and branding
• Photography for website/marketing
• Video production
• Podcast hosting

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Retirement Contributions

The big one: Self-employed retirement plan contributions (SEP-IRA, Solo 401(k)) are deductible and can be massive. For 2025, you can contribute up to $70,000 to a Solo 401(k) (or 25% of net self-employment income for SEP-IRA).

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Why this matters: Not only do you get the deduction, but you're building retirement savings. This is often the single biggest deduction for profitable self-employed individuals.

How Do I Track All This?

Here's the reality: You won't remember expenses from January when you're doing taxes in April. You need a system that runs on autopilot.

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Set Up These Three Things:

1. Separate bank accounts and credit cards

• One checking account for rental property
• One credit card for Schedule C business
• Never mix personal and business expenses

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2. Accounting software (even basic)

• QuickBooks Self-Employed
• FreshBooks
• Wave (free option)
• Even a detailed spreadsheet is better than nothing

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3. Receipt capture system

• Phone apps that scan receipts (Expensify, Receipt Bank)
• Or email receipts to yourself with a "BUSINESS" tag
• Or throw physical receipts in a dedicated folder monthly

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The Monthly Review Habit

Spend 30 minutes once per month:

• Review credit card statements
• Categorize transactions
• Upload receipts
• Note business purpose for meals and travel
• Track mileage if you didn't use an app

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‍Why monthly matters: You'll remember the business purpose of that March dinner meeting in April. You won't remember it in December.

Common Mistakes That Trigger Audits

1. Round numbers everywhere If every expense is $100, $50, or $75, the IRS notices. Actual expenses are messy — $47.23, $112.87, etc.

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2. Deducting 100% business use of vehicles Unless you have a dedicated business vehicle and another personal vehicle, 100% business use is basically never accurate. Be realistic — 60-80% is more defensible.

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3. Excessive meals and entertainment If your meals and entertainment exceed your revenue, you're likely getting audited. Be reasonable.

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4. Home office for W-2 employees If you're a W-2 employee with a side business, you can take home office for the side business. But you cannot take home office for your W-2 job (that deduction went away in 2018).

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5. No documentation "I definitely spent this" doesn't work with the IRS without receipts and documentation. Keep records for at least 3 years (7 years for depreciation).

The Bottom Line

The difference between someone who tracks expenses properly and someone who doesn't can easily be $5,000-15,000 in deductions annually. That's real money — $1,500 to $5,000+ in actual tax savings depending on your bracket.

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The secret isn't finding exotic deductions. It's thoroughly tracking the ordinary ones that happen dozens of times throughout the year.

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Wondering if you're maximizing your Schedule E and Schedule C deductions? Tax planning is most effective when it's proactive, not retroactive. Fifteenth can review your specific situation and help you implement a tracking system that captures everything you're entitled to deduct.‍