Deductible tips to workmen?

Since you're paying a business for the work, the straightforward way to give special recognition to the workers would be through their employer. Of course this would be part of your deductible expense for the rental. It would also be taxable income to the workers reflected on their W-2's.

If you don't want to go that route and just slip them some cash on the side, I'd be hesitant to deduct it since it sounds more like a gift to me.

Can't you make and deduct business-related gifts worth up to $25?

Stu

In order to deduct a business expense you need to show that it is ordinary and necessary and the amount is reasonable.

If it is common practice in that geographic area for property owners to tip their service and maintenance workers, then I would say it is probably an ordinary expense. And if the tip promotes a healthy relationship with the vendor and is helpful to the business, I would say it is also necessary. And... as long as the amount is reasonable, I would conclude it was deductible.

The issue to me was whether it's taxable to the workers, somewhat weighing "well, if it's income to the recipient it's deductible by the payer." An employer can give de minimus NON-CASH gifts to employees without inclucing the value in the employees' income (while deducting the cost). Cash is taxable as wages.

Of course, OP's situation isn't employer/employee. I like Alan's suggestion that holiday tips to the service vendors' employees would be an ordinary and necessary business expense.