--- title: Are Legal Fees Tax-Deductible for Investment Property? description: Before filing your annual tax return, you should always go over what deductions and tax credits you may qualify for. image: https://www.realized1031.com/hubfs/Images/photo/abstract/tax-filing-doc-IS-874826692.jpg --- [![Realized 1031 Exchange Marketplace](https://www.realized1031.com/hs-fs/hubfs/Images/Brand/Logo/Realized/Realized-Logo-Black.png?width=240&height=80&name=Realized-Logo-Black.png "Realized 1031 Logo") ](https://www.realized1031.com/) - [Wealth Management Gap](https://www.realized1031.com/the-wealth-management-gap) - [Our Process](https://www.realized1031.com/how-realized-works) - [Financial Advisors](https://www.realized1031.com/advisor) - [Resources](https://www.realized1031.com/resources) - [The Company](https://www.realized1031.com/about-us) - [Articles](https://www.realized1031.com/blog) [Register](https://www.realized1031.com/marketplace) [Log In](https://www.realized1031.com/login) - Better Business Bureau Rating: **A+** - [FINRA BrokerCheck](https://brokercheck.finra.org/firm/summary/22333) - [Call](tel:1-877-797-1031) **(877) 797-1031** # Are Legal Fees Tax-Deductible for Investment Property? Posted Jun 25, 2024 ![tax-filing-doc-IS-874826692](https://www.realized1031.com/hs-fs/hubfs/Images/photo/abstract/tax-filing-doc-IS-874826692.jpg?width=750&height=392&name=tax-filing-doc-IS-874826692.jpg) Before filing your annual tax return, you should always check what deductions and tax credits you may qualify for. There’s a good chance you incurred a few legal fees while acquiring your investment property or due to other business-related matters. If you sustain legal fees for your investment property, they may be tax-deductible.  Attorney fees aren’t cheap, but luckily, you might be able to offset that cost by taking a tax deduction. Legal fees are tax-deductible for investment property if they were incurred for business matters. To be eligible for this write-off, legal fees must be directly related to business operations or part of your acquisition costs.  ### Business-related legal fees are tax-deductible for investment property Legal fees are sometimes necessary expenses when managing your investment property, and that cost can sometimes be tax-deductible as a business operating expense. Here are some legal fees and expenses that may be tax-deductible for your investment property. Business-matters Legal fees are seen as a necessary business expense and can be tax-deductible. You can deduct legal fees for: - Lawyer fees, court expenses, and other similar costs if these are sustained during the production or collection of taxable income - Defending trademark, copyright, or patent claims  - Tax advice and preparation - Legal fees incurred during bankruptcy - Negotiating or drafting contracts for business activities - Defending and filing expenses over a business-related claim - Insurance claims related to business - Licensing fees Rental property activity You can deduct legal fees related to rental activity if it qualifies as a business. For example, If you needed to evict a tenant and hired an attorney, those fees are tax-deductible. However, landlords cannot deduct legal fees from defending the title of the property, recovering the property, or developing or improving the property. These are instead added to the property’s basis.  Start-up expenses If you have legal fees from starting a business as an LLC or a corporation, the cost is deductible up to $5,000. Anything over that amount can be deducted within the first 60 months of starting your business. Property acquisition Legal fees from acquiring property are not instantly tax-deductible. The amount is added to the[ cost basis](https://www.realized1031.com/glossary/basis) of the investment property and deducted through depreciation. ### Personal and investment-related legal fees aren't tax deductible The[ Tax Cuts and Jobs Act](https://www.realized1031.com/glossary/tax-cuts-and-jobs-act#sts=Upgrade%20Your%20Investments%20&%20Avoid%20Unnecessary%20Taxes) eliminated personal and investment-related legal fee tax deductions.[ According to the IRS](https://www.irs.gov/pub/irs-pdf/p529.pdf), “investment fees, custodial fees, trust administration fees, and other expenses you paid for managing your investments that produce taxable income are miscellaneous itemized deductions and are no longer deductible.” These deductions have been eliminated for 2018 through 2025.  Legal fees for your investment property must be business-related to be tax deductible. If you have questions about what legal fees are tax-deductible, consult a tax professional or ask your attorney to provide a billing statement showing what part of their fees are tax-deductible. This material is for general information and educational purposes only. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. Learn Ways to Help Reduce or Defer Taxes [![Learn Tax-Deferred Strategies](https://www.realized1031.com/hs-fs/hubfs/Images/UI/graphics/composites/IPWM-Tax-ebook-250b.png?width=250&height=295&name=IPWM-Tax-ebook-250b.png "Discover ways to potentially ...") ](https://www.realized1031.com/blog/are-legal-fees-tax-deductible-for-investment-property#blogform) Download eBook ---   --- ### Learn Tax-Deferred Strategies ![Learn Ways to Help Reduce or Defer Taxes](https://www.realized1031.com/hs-fs/hubfs/Images/UI/graphics/composites/IPWM-Tax-ebook-550a.jpg?width=550&height=600&name=IPWM-Tax-ebook-550a.jpg) Discover ways to potentially grow wealth by managing taxes. By providing your email and phone number, you are opting to receive communications from Realized. If you receive a text message and choose to stop receiving further messages, reply STOP to immediately unsubscribe. Msg & Data rates may apply. To manage receiving emails from Realized visit the Manage Preferences link in any email received. Search ### [Why Realized](https://www.realized1031.com/why-realized) - [Wealth Management](https://www.realized1031.com/the-wealth-management-gap) - [Why Realized](https://www.realized1031.com/why-realized) - [Our Process](https://www.realized1031.com/how-realized-works) - [Scenarios](https://www.realized1031.com/scenarios) - [Private Client Program](https://www.realized1031.com/private-client) - [Realized Exchange Services](https://www.realized1031.com/realized-exchange-services) ### [The Company](https://www.realized1031.com/about-us) - [The Team](https://www.realized1031.com/about-us) - [FAQ](https://www.realized1031.com/frequently-asked-questions) - [Testimonials](https://www.realized1031.com/testimonials) - [Press](https://www.realized1031.com/press) - [Careers](https://www.realized1031.com/careers) ### [Partners](https://www.realized1031.com/partners) - [Financial Advisors](https://www.realized1031.com/advisor) - [Broker Dealers](https://www.realized1031.com/partners/broker-dealers) - [Real Estate Agents](https://www.realized1031.com/partners/real-estate-agents) - [Certified Public Accountants](https://www.realized1031.com/partners/certified-public-accountants) ### [Resources](https://www.realized1031.com/resources) - #### Learn - [Articles](https://www.realized1031.com/blog) - [Glossary of Terms](https://www.realized1031.com/glossary) - [Capital Gains Tax Rates](https://www.realized1031.com/capital-gains-tax-rate) - #### Watch - [Video Library](https://www.realized1031.com/videos) - [Webinar Archive](https://www.realized1031.com/webinars) - #### Read - [Delaware Statutory Trust](https://www.realized1031.com/delaware-statutory-trust) - [Tenants-In-Common](https://www.realized1031.com/tenants-in-common-tic) - [1031 Exchange](https://www.realized1031.com/1031-exchange) - [Qualified Intermediary](https://www.realized1031.com/qualified-intermediary) - [Qualified Opportunity Zones](https://www.realized1031.com/opportunity-zones) #### Realized - 500 W 13th Street Austin, TX 78701 - (877) 797-1031 ##### [Contact Us](https://www.realized1031.com/contact-us) - [![Realized on Facebook](https://www.realized1031.com/hs-fs/hubfs/Images/UI/Social/Icons/Mix/social-facebook-whiterev.png?width=60&height=60&name=social-facebook-whiterev.png)](https://www.facebook.com/Realized/) - [![Realized on LinkedIn](https://www.realized1031.com/hs-fs/hubfs/Images/UI/Social/Icons/Mix/social-linkedin-whiterev.png?width=60&height=60&name=social-linkedin-whiterev.png)](https://www.linkedin.com/company/realized/) - [![Realized on YouTube](https://www.realized1031.com/hs-fs/hubfs/Images/UI/Social/Icons/Mix/social-youtube-whiterev.png?width=60&height=60&name=social-youtube-whiterev.png)](https://www.youtube.com/c/Realized1031?sub_confirmation=1) - [![Realized Holdings, Inc. BBB Business Review](https://www.realized1031.com/hs-fs/hubfs/Images/professional-assoc/bbb/RZH2-bbb-seal.png?width=40&height=65&name=RZH2-bbb-seal.png)](http://www.bbb.org/central-texas/business-reviews/real-estate-investors/realized-holdings-llc-in-austin-tx-1000112948/#bbbonlineclick) - [![FEA Logo](https://www.realized1031.com/hs-fs/hubfs/Images/professional-assoc/fea/RZH2-fea-logo.png?width=82&height=65&name=RZH2-fea-logo.png "FEA Logo")](https://www.1031.org) SECURITIES DISCLOSURE Realized1031.com is a website operated by Realized Technologies, LLC, a wholly owned subsidiary of Realized Holdings, Inc. (“Realized Holdings”). Securities and/or Investment Advisory Services may be offered through Registered Representatives or Investment Advisor Representatives of Realized Financial, Inc. ("Realized"), a broker/dealer, member [FINRA](https://www.finra.org)/[SIPC](https://www.sipc.org/), and registered investment adviser. Realized is a subsidiary of Realized Holdings, Inc. ("Realized Holdings"). Check the background of this firm on [FINRA's BrokerCheck](https://brokercheck.finra.org/firm/summary/22333). Hypothetical example(s) are for illustrative purposes only and are not intended to represent the past or future performance of any specific investment. Investing in alternative assets involves higher risks than traditional investments and is suitable only for sophisticated investors. Alternative investments are often sold by prospectus that discloses all risks, fees, and expenses. They are not tax efficient and an investor should consult with his/her tax advisor prior to investing. Alternative investments have higher fees than traditional investments and they may also be highly leveraged and engage in speculative investment techniques, which can magnify the potential for investment loss or gain and should not be deemed a complete investment program. The value of the investment may fall as well as rise and investors may get back less than they invested. This site is published for residents of the United States who are accredited investors only. Registered Representatives and Investment Advisor Representatives may only conduct business with residents of the states and jurisdictions in which they are properly registered. Therefore, a response to a request for information may be delayed until appropriate registration is obtained or exemption from registration is determined. Not all of services referenced on this site are available in every state and through every representative listed. For additional information, please contact the Realized Compliance department at 512-472-7171 or info@realized1031.com. - [Terms & Conditions](https://www.realized1031.com/terms-and-conditions) - [Privacy Policy](https://www.realized1031.com/privacy-policy) - [Form CRS](https://www.realized1031.com/hubfs/common-files/disclosures/FormCRS.pdf) - [ADV 2A](https://www.realized1031.com/hubfs/common-files/disclosures/ADV2A.pdf) - [Reg BI Disclosures](https://www.realized1031.com/hubfs/common-files/disclosures/RegBI.pdf) -   © 2026 Realized Holdings, Inc. ```json { "@context" : "http://schema.org/", "@type" : "BlogPosting", "articleBody" : "Before filing your annual tax return, you should always check what deductions and tax credits you may qualify for. There’s a good chance you incurred a few legal fees while acquiring your investment property or due to other business-related matters. If you sustain legal fees for your investment property, they may be tax-deductible. Attorney fees aren’t cheap, but luckily, you might be able to offset that cost by taking a tax deduction. Legal fees are tax-deductible for investment property if they were incurred for business matters. To be eligible for this write-off, legal fees must be directly related to business operations or part of your acquisition costs. Business-related legal fees are tax-deductible for investment property Legal fees are sometimes necessary expenses when managing your investment property, and that cost can sometimes be tax-deductible as a business operating expense. Here are some legal fees and expenses that may be tax-deductible for your investment property. Business-matters Legal fees are seen as a necessary business expense and can be tax-deductible. You can deduct legal fees for: Lawyer fees, court expenses, and other similar costs if these are sustained during the production or collection of taxable income Defending trademark, copyright, or patent claims Tax advice and preparation Legal fees incurred during bankruptcy Negotiating or drafting contracts for business activities Defending and filing expenses over a business-related claim Insurance claims related to business Licensing fees Rental property activity You can deduct legal fees related to rental activity if it qualifies as a business. For example, If you needed to evict a tenant and hired an attorney, those fees are tax-deductible. However, landlords cannot deduct legal fees from defending the title of the property, recovering the property, or developing or improving the property. These are instead added to the property’s basis. Start-up expenses If you have legal fees from starting a business as an LLC or a corporation, the cost is deductible up to $5,000. Anything over that amount can be deducted within the first 60 months of starting your business. Property acquisition Legal fees from acquiring property are not instantly tax-deductible. The amount is added to the cost basis of the investment property and deducted through depreciation. Personal and investment-related legal fees aren't tax deductible The Tax Cuts and Jobs Act eliminated personal and investment-related legal fee tax deductions. According to the IRS, “investment fees, custodial fees, trust administration fees, and other expenses you paid for managing your investments that produce taxable income are miscellaneous itemized deductions and are no longer deductible.” These deductions have been eliminated for 2018 through 2025. Legal fees for your investment property must be business-related to be tax deductible. If you have questions about what legal fees are tax-deductible, consult a tax professional or ask your attorney to provide a billing statement showing what part of their fees are tax-deductible. This material is for general information and educational purposes only. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions.", "articleSection" : [ "Tax" ], "author" : { "@type" : "Person", "email" : "marketing@realized1031.com", "image" : "", "name" : "The Realized Team", "url" : "https://www.realized1031.com/blog/author/the-realized-team" }, "dateModified" : "2024-06-25T21:11:42+0000", "datePublished" : "2024-06-25T21:11:42+0000", "description" : "Before filing your annual tax return, you should always go over what deductions and tax credits you may qualify for.", "headline" : "Are Legal Fees Tax-Deductible for Investment Property?", "image" : { "@type" : "ImageObject", "height" : 501, "url" : "https://f.hubspotusercontent10.net/hubfs/733513/Images/photo/abstract/tax-filing-doc-IS-874826692.jpg", "width" : 750 }, "mainEntityOfPage" : "https://www.realized1031.com/blog/are-legal-fees-tax-deductible-for-investment-property", "name" : "Are Legal Fees Tax-Deductible for Investment Property?", "publisher" : { "@type" : "Organization", "address" : { "@type" : "PostalAddress", "addressCountry" : "USA", "addressLocality" : "Austin", "addressRegion" : "TX", "postalCode" : "78701", "streetAddress" : "500 W 13th Street " }, "logo" : { "@type" : "ImageObject", "height" : 60, "url" : "http://www.realized1031.com/hubfs/Images/Brand/Logo/Realized/Realized-Logo-Black-No-Margin-296x60-AMP.png", "width" : 296 }, "name" : "Realized" }, "thumbnailUrl" : "https://f.hubspotusercontent10.net/hubfs/733513/Images/photo/abstract/tax-filing-doc-IS-874826692.jpg" } ```