Rental Property Taxes in Maine (2026 Guide)

1. Property Tax (and the Homestead Trap)

Maine property tax is levied by municipalities, not the state, so the rate depends on your town — effective rates statewide typically run about 1.1%–1.3% of market value. There is no separate state property tax on residential rentals.

2. Income Tax (Up to 9.15% in 2026)

Maine has a graduated income tax of 5.8% / 6.75% / 7.15%, plus a new 2% surcharge on Maine taxable income over about $1 million (L.D. 2212, effective 2026) that lifts the top rate to 9.15%. Net rental income flows through to your Maine return and is taxed at these rates.

3. Capital Gains Taxed as Ordinary Income

Maine has no preferential capital-gains rate — a long-term gain on the sale of a rental is taxed at the same graduated rates as ordinary income, up to 9.15% in 2026 once the high-income surcharge applies. Unlike states that exclude or discount long-term gains, Maine offers no break on disposition, so the full taxable gain (after depreciation recapture) hits your Maine return at your marginal rate. Plan the timing of a sale with that in mind.

4. Bonus Depreciation Add-Back

Maine does not conform to federal bonus depreciation (IRC §168(k)) and requires an add-back under 36 M.R.S. §5122(1) — you claim the bonus federally but reverse it for Maine and depreciate on the regular schedule. In exchange, Maine offers an alternative: the Maine Capital Investment Credit (MCIC) (36 M.R.S. §5219-NN), a credit equal to a percentage of the bonus you added back, claimed in the year of the addition. Keep a separate Maine depreciation basis so the two systems reconcile year to year.

5. Real Estate Transfer Tax

Maine's real estate transfer tax is $2.20 per $500 of value (0.44%) under 36 M.R.S. §4641, imposed half on the seller and half on the buyer (each pays $1.10 per $500). On a $300,000 sale that is about $1,320 total, roughly $660 per side.

6. LLC Annual Report ($85)

A Maine LLC must file an annual report with an $85 fee to the Secretary of State, Bureau of Corporations, Elections & Commissions, due between January 1 and June 1 each year. Miss it and a $50 late penalty applies, and a persistently delinquent LLC can be administratively dissolved. Budget the $85 as a recurring cost of holding rentals in a Maine LLC.

7. Rent Control (Local, Not Statewide)

Maine has no statewide rent control — but it permits municipalities to enact their own, and two have. This is a critical distinction many landlords miss:

• Portland — a 2020 ballot referendum created a rent-control ordinance that caps annual increases (tied to CPI, roughly 10% plus an allowance), with a Rent Board and registration requirements.
• South Portland — adopted a similar local rent-stabilization ordinance.
• Everywhere else in Maine — no cap; you set rents at market, subject to standard notice rules.

8. Security Deposit Rules

• Cap of 2 months’ rent — a residential lease or tenancy-at-will may not require a deposit greater than two months of rent (14 M.R.S. §6032).
• Return within 30 days of the end of a written rental agreement (the lease may state a shorter period), or within 21 days for a tenancy at will, whichever date is later (14 M.R.S. §6033).
• Itemized written statement required for any amount retained; deposits may not be kept for normal wear and tear.

9. How SheltrIQ Helps Maine Landlords

Maine’s graduated rates, new surcharge, and bonus add-back make the math nontrivial — SheltrIQ keeps your numbers on the current rules:

• Exact income modeling — applies the 5.8% / 6.75% / 7.15% schedule and the new 2% high-income surcharge so you see your true Maine liability up to 9.15%.
• Disposition modeling — taxes a rental sale’s gain (after depreciation recapture) as ordinary income at your Maine marginal rate, with no false capital-gains discount.
• Bonus-depreciation tracking — flags the §5122 add-back, keeps a separate Maine basis, and surfaces the Maine Capital Investment Credit alternative.
• AI Schedule E classification — sorts each expense to the right line so your Maine income starts from an accurate federal return.