Utilities & Other Expenses
HOA dues, electric bills, landscaping, and pest control — these day-to-day costs add up. Here is exactly how they flow onto your return.
A guide by Taxstra Tax & Accounting — CPA-led tax strategy for business owners
Schedule E Lines 17 (Utilities) and 19 (Other) capture the day-to-day operating costs that don't fit neatly into other categories. Line 17 is for utilities you pay (electric, gas, water, trash), while Line 19 is the "catch-all" for HOA dues, landscaping, bank fees, and pest control.
Accuracy here is key: if a tenant reimburses you for utilities, you must report the reimbursement as income and then deduct the expense here — do not simply net them to zero. And don't forget the vacancy gap: utilities you pay between tenants are still deductible, even though no rent is coming in.
Line 17: Utilities
Utilities you pay as the landlord — not utilities the tenant pays on their own account.
Line 17 covers utility costs that you, as the property owner, pay. The crucial qualifier is that you must be the one paying — utility costs paid directly by the tenant on accounts in their own name are not your expense and don't appear anywhere on your Schedule E.
Utility Costs That Belong Here
- Electricity
- Natural gas / heating oil
- Water and sewer charges
- Trash and recycling removal
- Internet/Wi-Fi for STR guests or tenant-included internet
- Common-area lighting (multi-unit buildings)
What Stays Off Line 17
- • Utilities billed directly to and paid by the tenant
- • Your personal home utility costs (unless home office applies)
- • Cable TV or streaming services you personally use
- • Internet at your primary residence (unless exclusively for rental management with home office)
Line 19: Other Expenses
The catch-all line. Requires a supplemental statement — never just a lump sum.
Line 19 is the Schedule E equivalent of Schedule C's Part V — a place for legitimate expenses that don't have their own dedicated line. When you use Line 19, you must attach a supplemental statement (typically generated by your tax software) that itemizes each expense. The IRS does not accept a single unlabeled amount on Line 19.
Common Line 19 Items
Association Fees
- • HOA / condo association dues
- • Special assessments (if maintenance, not capital)
- • Property owners association fees
Grounds & Services
- • Lawn care / landscaping services
- • Snow removal
- • Pest control contracts
- • Pool maintenance
Financial Costs
- • Bank fees on the rental account
- • Credit report fees for tenant screening
- • Late fee payments to vendors
STR-Specific Costs
- • Cleaning supplies and consumables
- • Smart lock batteries and maintenance
- • Guest amenity replenishment (coffee, toiletries)
HOA Special Assessments: Capital vs. Deductible
Not all HOA payments go on Line 19. Special assessments to fund capital improvements (new roof on the building, repaving the parking lot) are generally capital expenses — you add them to your basis rather than deducting them currently. Only recurring maintenance assessments and regular dues are current deductions. Check the HOA notice to see whether the assessment is for capital work or operational maintenance.
Tenant Utility Reimbursements
You cannot simply net reimbursements against your utility costs.
Some landlords pay utilities and then charge tenants back. This is common in buildings where utilities aren't individually metered. The correct tax treatment is:
Step 1
Report the full utility bill on Line 17 as your expense.
Step 2
Report the tenant reimbursement on Line 3 as rental income.
Net Effect
Income and expense cancel out — same tax result as netting, but compliant.
Why does this matter if the net result is the same? Because your return must reconcile with your bank deposits. Netting causes your reported income to be lower than your deposits — which looks like unreported income to the IRS computer matching system.
The Vacancy Gap Deduction
Utilities paid between tenants are still deductible — many landlords forget them.
When a tenant moves out, you typically switch utilities back into your name for cleaning, repairs, and showing the property. These are still deductible rental expenses — the property is still being held for rental even during vacancy.
The key requirement: the property must be held out for rental during the vacancy. If you decide to move in yourself or take it off the rental market, utilities after that decision are personal expenses — not deductible.
The Home Office Question for Landlords
Can you deduct home utilities as a rental expense? Only in specific circumstances.
Some landlords ask whether their home internet or a portion of their home utilities can be deducted as a rental expense. The answer depends on whether you qualify for the home office deduction as a real estate investor — which is a higher bar than most people realize.
Passive Investor (No Deduction)
If you own 1–2 rentals and manage them casually from your home office, you generally cannot take a home office deduction. Passive investment activity doesn't constitute a "trade or business" for home office purposes.
Active Trade or Business (May Qualify)
If your rental activity rises to the level of a "trade or business" — regular, continuous, substantial involvement — AND you have a space used 100% exclusively for property management, you may qualify for a home office deduction. Real Estate Professional Status (REPS) holders with multiple properties often meet this test.
Audit Defense Checklist
Three document types that validate every utility and other expense.
Utility Bills (matching the rental address)
The account and service address should match your rental property — not your home. Save the bills or account PDFs for 3–7 years.
HOA Statement showing dues amount
Annual HOA statement or monthly coupon books showing the exact assessment amount. For special assessments, note whether they are maintenance (deductible) or capital (basis adjustment).
Log of days used for "Vacancy Gap" expenses
A simple note or calendar entry showing move-out date, renovation/showing period, and move-in date for the next tenant. This establishes the property was held for rental during utility payments.
Frequently Asked Questions
Are You Capturing Every Rental Deduction?
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Educational guidance for real estate investors. Not individualized tax advice.