Mortgage Interest and Early Payment Penalty Tax Deductions for Landlords

As most of you know, interest paid on a mortgage used to either acquire or improve a rental property is tax deductible, but there are other important deductions available that you may not know.

These include interest on credit cards for goods or services used in a rental activity, and personal loans related to running the business. That is, if you need to borrow money in any form to pay for repairs or improvements on your property, all interest paid is considered a deductible expense.

Another lesser-known deduction is the prepayment penalty fee charged by some lenders for early loan payoff. So, if you pay off your mortgage early and your lender charges you a penalty, the IRS allows you to deduct that penalty as an interest expense.