Final answer:
Legal expenses related to rental property operation are typically deductible from Adjusted Gross Income (AGI) if they are ordinary, necessary, and directly related to the rental activity, not personal or capital expenses.
Step-by-step explanation:
The question pertains to the deductibility of legal expenses incurred in the operation of rental property. In general, for tax purposes, these legal expenses are indeed considered deductions from Adjusted Gross Income (AGI).
They are a part of the ordinary and necessary expenses paid or incurred during the taxable year in the management, conservation, or maintenance of property held for the production of income as specified under Internal Revenue Code section 212.
Therefore, they can be subtracted from your total income to lower your taxable income.
It is essential, however, to ensure that these expenses are directly related to the rental activity and are not capital expenditures, personal expenses, or related to the sale of the property.