As tax season approaches, Connecticut rental property owners must ensure they are maximizing their deductions, meeting filing deadlines, and avoiding common tax pitfalls. Here’s a guide to help landlords navigate the tax season efficiently and keep more money in their pockets.

Key Tax Deductions for Connecticut Landlords

One of the biggest advantages of owning rental property is the ability to claim various tax deductions. Here are some key deductions to remember:

• Mortgage Interest – Interest paid on loans used to purchase or improve rental property is deductible.

• Property Depreciation – The IRS allows landlords to depreciate the cost of residential rental properties over 27.5 years.

• Repairs & Maintenance – Immediate repairs (such as fixing a leaky roof or replacing a broken appliance) are deductible in the year they occur.

• Property Management Fees – If you use a professional property management company, those fees are tax-deductible.

• Home Office Deduction – If you manage your properties from a dedicated home office, you may qualify for this deduction.

• Insurance Premiums – Landlord insurance, liability insurance, and even umbrella policies are deductible expenses.

• Legal & Professional Fees – Any legal costs, accounting services, or tax preparation fees related to your rental business can be written off.

• Utilities & HOA Fees – If you pay for water, gas, electricity, or HOA fees on behalf of tenants, those costs are deductible.

• Travel Expenses – Mileage or travel costs related to property management, maintenance, or tenant interactions can be deducted.

Important Tax Deadlines for Connecticut Landlords in 2025

Staying on top of filing deadlines can help you avoid penalties and unnecessary stress. Here are some key dates:

• January 31, 2025 – Deadline to send 1099-NEC forms to contractors who performed more than $600 in services for your rental business.

• March 15, 2025 – Deadline for partnerships and S corporations to file tax returns.

• April 15, 2025 – Individual tax return deadline (Form 1040) for most landlords and sole proprietors.

• June 15, 2025 – Connecticut Quarterly Estimated Tax Payment Due for landlords paying estimated taxes.

• September 15, 2025 – Connecticut Quarterly Estimated Tax Payment Due for landlords paying estimated taxes.

• October 15, 2025 – Extended deadline for individuals who filed for a tax extension.

Common Tax Mistakes Connecticut Landlords Should Avoid

Many landlords lose money due to avoidable tax errors. Here are some common pitfalls:

1. Failing to Track Expenses Properly – Keep detailed records of all income and expenses throughout the year. Use accounting software or apps to streamline record-keeping.

2. Mixing Personal and Business Finances – Open a separate bank account for rental income and expenses to maintain clear financial records.

3. Misclassifying Repairs vs. Improvements – Repairs are immediately deductible, while improvements (like adding a new roof or renovating a kitchen) must be depreciated over time.

4. Overlooking Depreciation – Many landlords fail to claim depreciation, which can significantly reduce taxable income.

5. Not Reporting Rental Income – The IRS and the Connecticut Department of Revenue cross-check reported income, so failing to report rent payments can lead to audits and penalties.

6. Ignoring Connecticut-Specific Tax Laws – Connecticut has unique tax regulations, such as the property tax assessment and the pass-through entity tax for LLCs. Consult a local tax professional to ensure compliance.

Proper tax planning can save Connecticut landlords thousands of dollars every year. By taking advantage of deductions, meeting deadlines, and avoiding common mistakes, you can keep your rental business profitable while staying compliant with IRS and Connecticut state regulations. If you're unsure about any aspect of your taxes, consulting with a tax professional who specializes in Connecticut real estate can be a smart investment.

Need help managing your rental property more efficiently? Ironclad Property Management is here to support you with expert guidance and professional management services. Contact us today!