10 Tax Deductions Landlords Miss in Maryland

10 Tax Deductions Landlords Miss in Maryland

Landlords in Maryland have access to many deductions and credits — both at the federal and state/county level — but some are overlooked. The following are commonly missed tax breaks plus some state/local programs that many landlords either don’t know about or fail to apply for properly.

1. Historic & Rehabilitation Tax Credits

If your rental property is historic (or located in a historic district) and you do rehabilitation work, there are various Maryland state historic revitalization tax credits and local tax credits. These can cover substantial percentages of eligible rehab expenses.

• State Historic Revitalization Tax Credit Program: Income tax credit of 20% of eligible rehab expenditures on historic properties (commercial or residential) in Maryland.
• Small Commercial Historic Tax Credit: For smaller scale rehab/commercial income-producing properties. Maryland Historical Trust+2baltimoreheritage.org+2
• Local county/city credits: e.g. Montgomery County offers a 25% credit for restoration/preservation of historic property; Baltimore County offers both county and state credits. 

Why people miss them:

• The property might not be certified as historic or contributing, so they don’t qualify.
• They begin rehab work before securing necessary approvals, which can void eligibility.
• The paperwork is somewhat involved, so landlords don’t apply.

2. Catalytic Revitalization Tax Credit

Maryland has a program (Catalytic Revitalization Tax Credit, or CRTC) for large, often formerly state/federal‐owned or under-utilized properties, to help offset the gap between rehab costs and value. It supports projects with community benefit, job creation, affordable housing, etc. dhcd.maryland.gov

If you own a property that qualifies, the CRTC can give you a 20% credit of eligible project costs (subject to caps, application, and rules). Many landlords aren’t aware of this program. 

3. Depreciation on Rental Property + Improvement vs. Repair Distinctions

On the federal side (and relevant to Maryland when computing taxable income), landlords can depreciate the building (excluding land) on a schedule (residential rental property generally over 27.5 years). Repairs can be deducted in the year incurred, improvements must be capitalized and depreciated over time. 

Missed points:

• Failing to depreciate improvements properly.
• Misclassifying improvements vs repairs (repairs are deductible immediately; improvements are capitalized).
• Not prorating depreciation if a property isn’t rented full year.

4. Mortgage Interest & Points

Mortgage interest on a rental property is deductible. If you paid points when acquiring or refinancing, depending on use and IRS rules, some portion may be deductible over time. Many landlords forget to deduct all of their mortgage interest or fail to allocate interest properly when part of the property is owner-occupied (in mixed use). TurboTenant

5. Property Taxes and Local Taxes

You can deduct property taxes on a rental property as an expense (not subject to federal SALT cap when on Schedule E), and for state return, Maryland may have favorable treatments. 

But landlords often:

• Forget to include all components (municipal, school, special district assessments).
• Don’t adjust for property tax increases due to improvements or reassessment.
• Miss local property tax credits or abatements.

6. Insurance, Utilities, Maintenance & Management Costs

Routine costs of operating and maintaining a rental are deductible: property insurance, landlord liability insurance, utilities you pay, property management fees, landscaping, pest control, etc. Many landlords under-claim them or fail to keep good records.

7. Travel & Transportation / Vehicle Expenses

If you travel to your rental property(s) for repairs, maintenance, tenant issues, collecting rent, etc., those miles or expenses might be deductible. Also vehicle depreciation or standard mileage or actual cost if properly substantiated. Many landlords don’t track these or don’t separate business vs personal usage. (This is federal, but important for MD landlords too.)

8. Legal & Professional Fees

CPA, attorney fees, costs for preparing leases, eviction proceedings, bookkeeping, real estate consultant fees, etc. These are legitimate business expenses. Landlords often under-report or don’t realize some of these are deductible.

9. Carrying Costs During Vacancy

While a rental unit is vacant (but being held for rent, repairs in process, etc.), many of the carrying costs (utilities, mortgage interest, insurance, property taxes, maintenance) are still deductible. Some landlords assume deductions only apply when rented, but IRS rules allow deductions during vacancy as long as property is available for rent.

10. State & Local Property Tax Credit / Abatements and PILOT Programs

Maryland counties and cities often have property tax credit/abatement or PILOT (Payment In Lieu of Taxes) programs for certain types of rental properties, especially affordable housing or historic ones. These reduce real property tax bills over time. Many landlords are eligible but don’t apply or don’t meet criteria because they weren’t aware. Examples:

• Montgomery County PILOT for affordable multifamily rental housing: real property tax abatement in exchange for providing affordable units. Montgomery County Maryland
• Historic property tax credits at county/city levels (see #1 above).

How to Avoid Missing These Deductions / Credits

• Check historic status of your property. Even when it’s not obvious, being in a district or being eligible might open doors.
• Get approvals first before rehab or restoration work. If work isn’t pre-approved as required by the program, you may lose the credit.
• Keep excellent records: invoices, permits, before/after photos.
• Consult local county/city tax assessors or preservation offices to see what local programs you qualify for.
• Coordinate federal, state, and local programs: often you can stack credits (federal rehab, state tax credit, local credit).
• Use a tax professional familiar with real estate and Maryland state law.