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what are the 4 % deductions on rental income and it has a cap

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  • Meaning:

    • You are allowed to claim actual expenses (like admin fees, agent commission, collection charges, insurance, local taxes, etc.) up to 4% of gross rent.

    • This is in addition to the 20% standard deduction of gross rent.

    • But you can only claim such expenses if you have actually incurred and can prove them.

    • If your actual expenses exceed 4% of rent, you can still only claim up to 4%.

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