Tax Secrets Every Landlord MUST Know in 2025

Tax season can feel overwhelming, especially if you’re a landlord or real estate professional. But don’t worry; we’re here to help you navigate the complexities of taxes while maximizing your savings. From understanding material participation to knowing what expenses you can write off, we’ve got you covered with expert insights from Latoya Tillett, an IRS-enrolled agent and CEO of Tax Plus Financial Services.

What is Material Participation and Why Does it Matter?

Material participation is a crucial concept that determines whether your real estate activities are considered active or passive. According to Latoya, "If you're actively involved in decision-making, administrative duties, or managing your rental property, you are materially participating." This applies to landlords, short-term rental hosts, and even those with property managers.

For landlords with property managers, you maintain material participation if you make key decisions, such as approving tenants or overseeing significant repairs. For short-term rental hosts, the rules differ slightly because these activities often involve providing additional services (cleaning, utilities, etc.), which classify it as a business and require reporting on a Schedule C.

Tax Deductions Landlords Shouldn't Miss

Want to keep more money in your pocket? Latoya shared several expenses that landlords and rental property owners should track throughout the year:

“Keep everything,” Latoya emphasized. From repair receipts to mileage logs, comprehensive record-keeping is your best strategy for reducing tax liabilities and staying compliant.

The Truth About “Donations” on Social Media

If you're earning income through platforms like TikTok, YouTube, or Instagram, calling your payouts "donations" doesn't exempt you from taxes. Latoya clarified, "Unless you're a certified 501(c)(3) charity, those payments are considered income and must be reported." Influencers and creators often receive 1099 forms, which reflect their earnings and ensure the IRS gets its share.

Her advice? Don’t fall for internet loopholes or misinformation. The IRS is vigilant, and missteps could lead to audits or penalties. Transparency and proper reporting are key.

Short-Term Rentals: A Different Tax Game

Short-term rental hosts (think Airbnb or VRBO) often find themselves in a unique tax situation because they provide additional services for guests. This means their income is reported on a Schedule C as business income rather than a Schedule E for standard rental properties.

Latoya highlighted: “If you're providing amenities like cleaning services, utilities, and furniture, it's considered a business, not passive income.” This distinction affects how your tax deductions work and the level of IRS scrutiny your filings may receive.

Preparing for Tax Season Like a Pro

Staying prepared year-round is essential for a smooth tax season. Here’s what every landlord should do:

Latoya also mentioned an invaluable tip: “Section 162 of the IRS code is your saving grace. It explains what write-offs are ordinary and necessary for your business.” Knowing this can help you justify certain expenses and avoid audits.

Common Tax Mistakes to Avoid

Not all tax preparers are created equal. Avoid anyone who guarantees large refunds or charges a percentage of your return. “It’s unethical and a red flag for the IRS,” Latoya warned. Instead, work with certified professionals who know how to legally minimize your tax liabilities while keeping you compliant.

Another mistake? Assuming you don’t need to file for certain income streams. Whether you’re an exotic dancer, a landlord, or a side hustler, the IRS requires you to report all income—even earnings from illegal activities (yes, really!).

Final Thoughts

Taxes don’t have to be intimidating. With the right preparation, expert guidance, and clear understanding of IRS rules, you can save money and avoid unnecessary stress. As Latoya shared, “Be nice to your tax preparers—they’re your partners in making sure you stay compliant and maximize your returns.”

If you’re ready to take control of your taxes, visit icutaxes.com to connect with experienced professionals like Latoya. Whether you’re a landlord, a short-term rental host, or a self-employed entrepreneur, there’s a solution tailored for you.

What’s your biggest tax challenge as a landlord or real estate professional? Share in the comments below, and let’s keep the conversation going!