What this line means
The cost of utilities you pay for your rental property — electricity, gas, water, sewer, trash collection, internet, and cable. If the tenant pays their own utilities directly, you have no deduction. If you pay utilities as the landlord (common in multi-family buildings, short-term rentals, and inclusive lease arrangements), the full amount goes on line 17.
Does this apply to you?
- You pay the electric, gas, or water bill for a rental property
- You provide internet or cable service as part of the rental
- You pay for trash collection or sewer service at a rental property
- You cover utility costs during vacancy periods between tenants
Easy to overlook
Utilities during vacancy periods are deductible When your rental property sits empty between tenants, you still pay to keep the water on, maintain heat (to prevent pipe damage), and keep electricity running for showings. These vacancy-period utility costs are deductible rental expenses even though no rent is being collected. Landlords often stop tracking utility costs during vacancies, treating them as sunk costs rather than deductions. 1 IRS Publication 527 — Residential Rental Property
Common-area utilities in multi-family buildings are fully deductible If you own a duplex, triplex, or apartment building and pay for common-area lighting, hallway heating, or shared laundry room electricity, those costs go on line 17. When the building has both a rental unit and your personal residence, allocate utilities between personal and rental use based on square footage or a metered split. 2 General filing pattern — landlord-paid utilities not deducted
Watch out for this
Deducting tenant-paid utilities as your expense. If the lease requires the tenant to pay utilities directly to the utility company, you have no cost and no deduction. However, if the tenant pays you a utility reimbursement as part of rent, include that amount in rental income on line 3 and deduct the actual utility bill you paid on line 17.
Footnotes
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IRS Publication 527, Residential Rental Property, Rental Expenses. https://www.irs.gov/pub/irs-pdf/p527.pdf ↩
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IRS Publication 527, Residential Rental Property, Utilities. https://www.irs.gov/pub/irs-pdf/p527.pdf ↩