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Maximizing Oregon Rental Property Tax Deductions: Your 2026 Filing Season Guide for Landlords

Mr Portland Landlord reports this article

Hey folks, Christian Bryant here—your friendly Mr. Portland Landlord, coming to you from the rainy side of Oregon with a hot cup of coffee and some good news for your wallet. It’s late January 2026, which means we’re all knee-deep in gathering receipts, running numbers, and getting ready to file returns for the 2025 tax year. And if there’s one thing I’ve learned after years of managing rentals from Beaverton to Bend, it’s this: nobody enjoys paying more taxes than they absolutely have to. Maximizing every allowable deduction isn’t being aggressive—it’s just smart business that rewards the risk and work you put into owning rental property.


This year feels especially timely because of the big federal win in the “One Big Beautiful Bill” that restored 100% bonus depreciation for qualified property placed in service after January 19, 2025. If you bought new appliances, replaced HVAC systems, or made certain interior improvements last year, you might be able to write off the entire cost in one shot. Add in the evergreen deductions we’ve always had, and there’s real money on the table.


So let’s walk through the major opportunities step by step, with Oregon-specific examples, common pitfalls, and practical tips you can actually use. (Full disclaimer up front: I’m a landlord and association director, not a CPA. This is general guidance—always run your specific situation by a tax professional familiar with Oregon rental properties.)


Why Maximizing Oregon Rental Property Tax Deductions Matters


Rental income is taxed as ordinary income, but the IRS lets us offset virtually all ordinary and necessary expenses of owning and operating the property. Done right, deductions can drop your taxable rental income dramatically—sometimes to zero or even create a loss that can shelter other income (within limits). In a high-cost state like Oregon, where property taxes, insurance, and maintenance run higher than many places, leaving deductions unclaimed is like volunteering to overpay.


Schedule E Basics: Where It All Gets Reported


Most of us report rental income and expenses on federal Schedule E (Supplemental Income and Loss), which flows to your Form 1040. Oregon generally conforms to federal rules for rental activities, so the same numbers usually carry over to your state return with only minor adjustments on Schedule OR-A.


Common mistake I see all the time: mixing personal and rental expenses on the same credit card or bank account. Keep them separate—or at least tag transactions clearly—so you’re not scrambling in January trying to remember whether that Home Depot run was for your personal residence or the duplex on 82nd Avenue.


Day-to-Day Operating Expenses


These are the bread-and-butter deductions you can take in the year you pay them:


  • Repairs (not improvements—more on that below)

  • Property management fees

  • Insurance premiums

  • Landlord-paid utilities

  • Advertising for tenants

  • Office supplies, postage, software

  • Legal and professional fees

  • Licenses and permits


Real-world example: You pay a handyman $1,200 to fix a leaking faucet and replace rotten siding on a Portland triplex. That’s fully deductible as a repair in 2025. Document it with the invoice, a photo if possible, and note which unit it applied to.


The Crucial Distinction: Repairs vs. Capital Improvements


This trips up more landlords than almost anything else. Repairs maintain the property and are expensed immediately. Improvements add value or prolong useful life and must be capitalized and depreciated.


  • Repair: Patching a roof leak → deduct now.

  • Improvement: Replacing the entire roof → capitalize and depreciate (or potentially bonus depreciate if placed in service after January 19, 2025).


The IRS looks at the scope and purpose. When in doubt, lean conservative and talk to your accountant.


Illustration comparing repair (immediate deduction) versus capital improvement (depreciation) for rental properties.
Understanding the key difference: repairs vs. capital improvements for Oregon rental property tax deductions.

Mortgage Interest and Property Taxes


Interest on loans secured by your rental property is generally fully deductible on Schedule E. Property taxes are also deductible there—no longer limited by the $10,000 SALT cap that applies to personal itemized deductions.


In Multnomah County and Portland, where property taxes can easily top $6,000–$10,000 per year on a modest single-family rental, this deduction alone can save thousands.


Depreciation: Still the Biggest Non-Cash Deduction


Residential rental real estate is depreciated straight-line over 27.5 years. If you bought a rental for $400,000 with $100,000 allocated to land (non-depreciable), you’d deduct ($300,000 ÷ 27.5) ≈ $10,909 per year.


But the exciting 2025 change: 100% bonus depreciation is back permanently for qualified property placed in service after January 19, 2025. That includes appliances, carpeting, certain interior improvements, furniture in furnished units—basically most personal property inside the rental.


Example: You install a new $8,000 HVAC system in December 2025. Instead of depreciating it over 5 or 7 years, you can deduct the entire $8,000 in 2025 if you elect bonus depreciation.

Advanced tip: A cost segregation study can reclassify portions of the building (plumbing, electrical, landscaping) into 5-, 7-, or 15-year property, accelerating depreciation even without bonus. Well worth it on properties over ~$500,000 purchase price.


Section 179 Expensing


The 2025 Section 179 limit is $2,500,000 (phase-out starts much higher). Many of the same items that qualify for bonus depreciation also qualify for immediate Section 179 expensing. You can mix and match strategies depending on your overall tax picture.


Oregon landlord preparing 2025 rental property tax deductions at desk with Portland view.
Landlord reviewing the latest deductions for Oregon rental properties.

Vehicle, Travel, and Home Office Deductions


If you drive to your rentals for management or repairs, track those miles. The 2025 standard mileage rate is 70¢ per mile. Keep a contemporaneous log—apps like MileIQ make it painless.


Home office: If you actively manage your rentals from a dedicated space in your home, a portion of utilities, internet, insurance, and even mortgage interest/rent can be allocated to the rental activity.


Passive Activity Loss Rules and the $25,000 Special Allowance


Rental activities are generally passive, so losses can only offset passive income—unless you qualify for the $25,000 special allowance. If your modified AGI is under $100,000 and you “actively participate” (make management decisions), you can deduct up to $25,000 of rental losses against ordinary income. It phases out between $100,000–$150,000 AGI.

If you or your spouse qualify as a real estate professional (spending >750 hours and more than half your working time on real estate), the passive limits disappear entirely.


The January Deadline You Can’t Ignore: 1099-NEC Forms


If you paid any contractor $600 or more in 2025 for rental-related work (plumbing, painting, landscaping, etc.), you must issue a 1099-NEC by January 31, 2026. (Note: the threshold increases to $2,000 starting with 2026 payments.)


Steps:

  1. Collect a W-9 from every contractor before you pay them.

  2. Use IRS Form 1099-NEC (available free online).

  3. File Copy A with the IRS (electronically if ≥10 forms) and send Copy B to the contractor by Jan 31.

  4. Oregon does not require state copies for 1099-NEC.


Penalties start at $60 per late form and go up to $630 if intentional. Not worth the risk.


Oregon-Specific Nuances


Oregon generally follows federal rental expense rules. Major differences are rare, but watch Schedule OR-A for any required additions or subtractions. Local business taxes (Portland/Multnomah County Business Income Tax or the new Multnomah Preschool for All tax if your income triggers it) are separate from state income tax but still important.


Record-keeping and Audit Red Flags


Keep receipts, invoices, bank/credit card statements, mileage logs, and photos for at least seven years. Common triggers: huge repair deductions relative to rental income, home office claims without exclusive use, or large passive losses at higher income levels.


Wrapping Up


Maximizing Oregon rental property tax deductions isn’t about gaming the system—it’s about using the rules Congress wrote to encourage investment in housing. Take advantage of the restored 100% bonus depreciation, track every expense diligently, issue those 1099s on time, and you’ll keep more of your hard-earned cash flow.


As always, this is educational information only. Tax laws are complex and individual circumstances vary widely. Please consult a qualified Oregon CPA or tax advisor before filing.


Happy filing, and here’s to a prosperous 2026!


By Christian Bryant

January 23, 2026


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