The fourth quarter starts in about ten days. For rental property owners, that calendar page matters far more than April 15 does. By the time you hand a folder of receipts to your accountant in the spring, nearly every decision that could have changed your tax bill has already been made. Filing happens in April. Planning happens now.
Below are seven moves worth reviewing between now and December 31. A quick disclaimer first: we manage rental property, we are not tax professionals. Treat this as a planning checklist to bring to your CPA, not as tax advice. Tax rules change, and your situation is specific to you.
1. Understand the Difference Between a Repair and an Improvement
This single distinction drives more of your rental tax outcome than anything else on this list. A repair keeps the property in ordinary operating condition and is generally deducted in full the year you pay for it. An improvement betters, restores, or adapts the property to a new use, and generally has to be capitalized and depreciated over time.
Patching a section of drywall is usually a repair. Replacing the entire HVAC system is usually an improvement. The line is not always obvious, and the IRS tangible property regulations are where it gets drawn. What matters for planning purposes is that the timing and the framing of the work both affect when you get the deduction.
2. Ask Your CPA About the De Minimis Safe Harbor
Under the final tangible property regulations, a taxpayer without an applicable financial statement may elect a de minimis safe harbor to deduct amounts paid for tangible property up to $2,500 per invoice or per item, as substantiated by the invoice. The threshold is $5,000 per invoice or item for taxpayers who do have an applicable financial statement.
The practical takeaway is about invoicing. If your contractor replaces four appliances and bills them on one lump-sum invoice, you may lose the per-item treatment. Ask vendors to itemize. The election is made by attaching a statement to a timely filed original return, and it applies to every qualifying expenditure that year, so it is a conversation to have before you file, not after.
3. Check Whether You Qualify for the Safe Harbor for Small Taxpayers
There is a second safe harbor aimed squarely at owners of modest rental portfolios. A qualifying taxpayer with average annual gross receipts of $10 million or less, holding building property with an unadjusted basis of $1 million or less, may elect to deduct amounts paid during the year for repairs, maintenance and improvements on that building, provided the total does not exceed the lesser of 2 percent of the building's unadjusted basis or $10,000.
That describes a large share of single-family and small-multifamily rentals in Greensboro and across the Triad. It is worth running the 2 percent math on each property now, while you can still decide whether a borderline project belongs in this tax year or the next one.
4. Time Year-End Purchases on Purpose
The 100 percent additional first-year depreciation deduction, commonly called bonus depreciation, was made permanent for eligible property acquired after January 19, 2025, and the IRS issued guidance on it in Notice 2026-11. For rental owners, this generally reaches shorter-lived assets such as appliances, flooring and certain land improvements rather than the building itself, which stays on the 27.5-year residential schedule.
Two practical notes. First, property generally has to be placed in service, not merely ordered, by December 31 to count for this year. A range delivered on December 29 and a range sitting on a loading dock are different tax outcomes. Second, a bigger deduction now is not automatically the right answer; it can matter how your income looks this year versus next.
5. Reconcile Your Mileage Log Before the Year Closes
2026 is an unusual year for anyone driving to their own rentals. The IRS set the business standard mileage rate at 72.5 cents per mile effective January 1, 2026, then revised it to 76 cents per mile for deductible transportation expenses paid or incurred on or after July 1, 2026, in response to fuel price increases.
That means your 2026 log has to be split at the mid-year mark, not averaged. If you have been driving across Guilford County to meet contractors, show units or check on turnovers, go back through your calendar now while you can still reconstruct dates. Reconstructing eleven months of trips in March is how legitimate deductions get abandoned.
6. Revisit the Qualified Business Income Deduction
The Section 199A qualified business income deduction, which allows eligible taxpayers to deduct up to 20 percent of qualified business income from a qualified trade or business, was made permanent by Public Law 119-21. Whether a rental activity rises to the level of a trade or business for this purpose is a genuine question, not a formality.
The IRS provided a safe harbor for rental real estate enterprises in Notice 2019-07, which centers on maintaining separate books and records, meeting an annual threshold of rental services hours, and keeping contemporaneous records of those services. Contemporaneous is the operative word. If you intend to rely on it, the recordkeeping has to happen during the year, which is another argument for fixing your logs in September rather than next spring.
7. Clean Up the Paperwork While the Year Is Still Open
Most of the value in year-end planning is unglamorous. Before December 31, it is worth working through a short list:
- Collect W-9s from every contractor you paid this year, before you need to issue information returns in January.
- Separate security deposits from rental income in your books. A deposit you are holding is generally not income; a deposit you apply to unpaid rent generally is.
- Pull your Guilford County property tax records and confirm what was actually paid, not just billed.
- Reconcile your insurance premiums, HOA dues, management fees and utility payments against bank records.
- Note any property that went vacant, was taken off the market, or was converted to personal use, since that affects how expenses are treated.
IRS Publication 527, Residential Rental Property, is the plain-language reference for most of this, and it is free.
Key Takeaways
- Tax outcomes for rental property are decided in the fall, not at filing time.
- How work is classified and invoiced drives whether you deduct it now or depreciate it over years.
- Two safe harbors, the de minimis election and the small taxpayer election, exist specifically for owners of smaller portfolios.
- Bonus depreciation generally requires property to be placed in service by December 31.
- 2026 mileage must be split at July 1 because the rate changed mid-year.
- Good contemporaneous records are what make every other item on this list survive scrutiny.
Bring this list to your accountant before the holidays, when they still have time to talk through it with you. And if the reason your records are thin is simply that self-managing has become a second job, that is a fixable problem. We handle the documentation, vendor invoicing and expense tracking for owners across Greensboro and the Triad, and clean books are a byproduct of that work. Reach out to Doss & Spaulding Properties if you would like to talk about what that looks like for your property.
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