The general rule: deduct the business-use percentage
If you use your personal cell phone or home internet connection to manage rental properties — calling tenants, coordinating repairs, researching properties, communicating with property managers — the rental-business portion of those costs is deductible on Schedule E as an ordinary and necessary expense.
You do not need a dedicated phone or internet line for rentals, but you must make a reasonable allocation between business and personal use. Only the business portion is deductible. The allocation is based on actual usage: if you estimate 20% of your phone time is spent on rental management, 20% of the annual bill is deductible.
How to estimate and document the business use percentage
Allocation methods for phone and internet use:
Time-based: Estimate the percentage of total usage time devoted to rental management. A log of calls made for rental purposes vs. personal calls provides support. Even a rough weekly average holds up better than a pure estimate.
Data/line-item-based: If you have a dedicated phone line or internet account solely for property management, 100% of that specific cost is deductible.
The IRS does not specify a single required method, but your method should be reasonable and consistent year to year. Document it in your records — a simple note of your methodology is sufficient for most audits. For landlords with one or two properties, 10–30% is a defensible allocation for a shared personal-business phone. More active landlords managing multiple properties could justify higher percentages.
What costs are deductible and what's excluded
Deductible costs include: monthly service charges, data plan fees, and taxes and fees on your phone or internet bill — the rental-use percentage of each.
Not deductible as a rental expense: the purchase price of the phone itself (this is either a capital expense or a Section 179/bonus depreciation item for a primarily business device, not a Schedule E operating expense), personal calls, entertainment streaming, or any purely personal use.
If you have a phone that is used more than 50% for business overall, you can depreciate the phone as a business asset and deduct 100% of service costs in proportion to business use. For most individual landlords, the service cost allocation method (deduct a percentage of the monthly bill) is simpler and sufficient.
Frequently asked questions
What percentage of my phone bill can I deduct for rental management?
However much of your phone time is genuinely spent on rental property management — typically 10–40% for a small landlord, higher if managing multiple properties actively.
Do I need a separate phone for rental management?
No. A dedicated line simplifies documentation (100% deductible), but you can deduct a percentage of a shared personal-business phone.
Is the phone I bought for my rental business deductible?
Possibly — if it is used more than 50% for business, you can depreciate the cost or take a Section 179 deduction. If primarily personal with some business use, only the annual service fees (at the business-use percentage) are deductible on Schedule E.
Sources
Educational information and estimates only. Not tax advice. Tax rules change and vary by situation; consult a qualified tax professional before acting.