Tax Deductions for Renters: How To Use Your Rent Costs to Your Advantage

While we know filing your taxes isn’t actually exciting, it can be an opportunity to save some money through tax deductions. Historically, homeowners mainly benefitted from tax deductions, but the good news is that renters can, too.

Now, not all renters are eligible for certain tax deductions. But if you’re self-employed or use your residence for business purposes, you might be able to reduce your tax burden. To learn which resources you need to file your taxes, we spoke with a trusted tax professional to get the lowdown on tax deductions for renters—and who qualifies for them.

What renters should know about tax season

It’s no secret that higher rent prices impact people’s ability to save, but the good news is you could be eligible for certain deductions as a renter through these payments.

“Renters may qualify for valuable tax deductions, depending on the nature of their work, filing, and residency status,” shares Riley Adams, a certified public accountant and founder of WealthUp. But he adds that to qualify for such deductions, “you’ll need to own and operate a business, freelance, or otherwise use the property you rent as a home base for earning a living outside of a formal employment relationship as a W-2 employee.”

If that applies to you, there’s a chance you may qualify for tax deductions related to self-employment or property taxes. To know for sure, consult a tax professional for expert guidance.

Tax deductions for renters

Whether you qualify for tax deductions as a renter depends on the nature of your work, how you plan to file your taxes, and where you live. Here’s a breakdown of the top deductions to consider as a renter:

Home office tax deduction

First things first, Adams notes that this tax deduction does not apply to W-2 employees. The home office tax deduction is a business-use percentage of square footage, applied to the whole rented space’s size.

“A CPA would consider a percentage of your internet, electricity, gas heating, renter’s insurance, and the rent equivalent to the percentage of your rented space fully dedicated to your home office,” he says.

Property tax deduction

Like the home office tax deduction, this may apply to some renters but only “should the renter have documentation in their lease substantiating that a portion of what they pay in rent is meant to pay for property taxes on the property,” Adams says. In that case, review your lease agreement to verify if a part of your monthly rent goes toward property taxes.

Can I claim rent as a deduction on taxes?

According to Adams, you cannot claim rent as a deduction if the rent is for a place serving as your primary residence.

“If they maintain a home office that meets the criteria set forth in the home office deduction stipulations—[meaning it] meets the exclusive- and regular-use tests—and also is the principal place of business for their business, then they [may be able to] deduct a portion of their rent and other applicable home office expenses on their taxes,” explains Adams.

However, it’s best to speak with a CPA regarding whether you apply for such a deduction, especially if you plan to complete your taxes independently.

To learn more about how to prepare for the 2024 tax filing season, refer to the latest guidance from the IRS.