It takes careful planning to provide for your income in retirement, and real estate investments offer fantastic tax benefits to investors. These laws exist to encourage investments in the real estate market through incentives. Missed opportunities to keep more of your income can add up over time, and knowing what you can write off the taxes on your Ohio investment property can help guide your decisions and increase your profits over the long term. But, of course, real estate investing is a business, so you should treat it as such. In addition, each of these laws has qualifiers and complex nuances, so it is always recommended you work with a tax advisor to help.
You should begin developing smart, repeatable methods in your daily work habits that improve your odds of building a prosperous real estate portfolio. For investors in Ohio, organized recordkeeping is imperative—not just for tax season, but for every decision you make related to your rental properties or real estate holdings. Establish a tracking system for your receipts, contractor invoices, mileage, repairs, and any related expenses to stay financially healthy and legally protected. It’s disheartening to think of how many profits slip through the cracks due to poor documentation. Missed tax deductions and overlooked write-offs can cost real estate investors thousands over time.
Staying organized allows you to track depreciation, amortization, and deductible expenses accurately. Knowing what qualifies as a legitimate deduction—and what does not—helps you stay on the IRS’s good side while maximizing your bottom line.
If you’d like to avoid missing out on valuable tax deductions and want to be better prepared for your next meeting with a CPA or tax advisor, keep reading to explore what you can legally write off when filing taxes on your Ohio investment property. From maintenance costs to property management fees and depreciation schedules, getting organized now can save you substantial money in the long run.
Passive or Non-Passive Income?
Understanding the distinction between passive and non-passive real estate income is crucial when it comes to tax planning. How your Ohio investment property income is classified will directly affect what you can deduct and how much you’ll owe the IRS.
For most investors, rental income is considered passive unless you’re materially participating in the business. Passive losses can be used to offset passive income, which can be a huge tax advantage. However, if you are a hands-on investor who spends significant time managing your properties, you may qualify as a real estate professional in the eyes of the IRS.
To meet this qualification, you must spend at least 750 hours per year and more than 50% of your total working time actively involved in real estate business activities. If you qualify, your income may be treated as non-passive, opening the door to a broader range of tax deductions and even the possibility of offsetting your active income from other sources.
Whether you’re a casual investor or working toward full-time real estate professional status, always document your hours and activities. Keeping a detailed logbook, timesheet, or digital record is a smart way to protect yourself and maximize your potential tax benefits.
Write-Offs
If it has to do with your investment properties and isn’t an improvement, but a necessary part of maintaining, managing, or the expenses you may incur for operations in your portfolio, are all areas of allowable deductions for real estate investors on your Ohio investment property.
Depreciation
One of the most powerful tools to reduce your taxable income from your Ohio investment property is through real estate depreciation. Depreciation offers a non-cash deduction that accounts for the wear and tear on your property’s physical structures over time. While the land itself is not depreciable due to its appreciating nature, the improvements—such as buildings, renovations, and systems like plumbing or HVAC—can be depreciated over set periods, depending on their classification. Leveraging depreciation allows you to offset income and reduce your overall tax burden year after year, which can significantly boost your investment’s long-term profitability.
Pass-Through Deduction
Real estate investors in Ohio may also benefit from the pass-through deduction, also known as the Section 199A Qualified Business Income (QBI) deduction. This valuable deduction, active through the end of 2025, enables eligible landlords and investors to deduct up to 20% of qualified rental income on certain properties. If your rental property is treated as a business, this deduction can provide a major tax break, especially when combined with other write-offs like depreciation and mortgage interest. Proper classification and documentation are key to maximizing this benefit, so working with a knowledgeable advisor is strongly recommended.
Capital Gains
Understanding how capital gains affect your Ohio investment property is crucial when it’s time to sell. Real estate capital gains are categorized into short-term (property held for less than a year) and long-term (held longer than a year), with the latter typically taxed at a lower rate. Smart real estate investors plan their holding periods strategically to benefit from long-term capital gains rates. In some cases, you may also offset capital gains by harvesting losses from other properties or investments. Timing your sale and knowing your options will help you retain more of your hard-earned equity.
Incentive Programs
There are also special tax incentive programs available to real estate investors in Ohio. A 1031 exchange, for example, allows you to defer paying capital gains taxes when you sell one investment property and reinvest the proceeds into another like-kind property. This deferral can continue indefinitely if you continue exchanging. Additionally, investing in a Qualified Opportunity Zone (QOZ) fund may allow you to defer capital gains until December 31, 2026—or until the opportunity zone asset is sold—whichever comes first. These programs are excellent strategies for tax planning and long-term portfolio growth.
Special Loss Allowance
Qualified individuals can also take advantage of the special loss allowance on passive income from rental properties. This provision allows investors in Ohio to deduct up to $25,000 in passive real estate losses against other types of income, provided certain conditions are met—typically tied to income thresholds and active participation. This benefit can be especially valuable for new landlords or those with multiple properties where early repairs or vacancies might generate net losses.
Why not work with a team of real estate professionals who understand the nuances of tax laws and investment strategies? At Wright Home Offer, our experienced investors stay up-to-date with ever-changing tax codes and market conditions in Ohio. When you partner with the professional investors at Wright Home Offer, we’ll help you identify the right properties for your portfolio and guide you on how to structure your investments for maximum return—and minimum tax liability.
Let the pros at Wright Home Offer help you earn the highest returns possible while protecting your bottom line. Don’t forget to ask about our current inventory of the most lucrative investment properties available in Ohio. Call Wright Home Offer at 937-998-4239.