Filing Your Taxes Online is Fast, Easy and Secure.
Start now and receive your tax refund in as little as 7 days.

1. Get Answers

Your online questions are customized to your unique tax situation.

2. Maximize your Refund

Find tax credits for everything from school tuition to buying a hybri

3. E-File for FREE

E-file free with direct deposit to get your refund in as few as 7 days.

Filing your taxes with paper mail can be difficult and it could take weeks for your refund to arrive. IRS e-file is easy, fast and secure. There is no paperwork going to the IRS so tax refunds can be processed in as little as 7 days with direct deposit. As you prepare your taxes online, you can see your tax refund in real time.

FREE audit support and representation from an enrolled agent – NEW and only from H&R Block

Tax Planning Us File Your Own Taxes

H&r Block Advantage Free File1040ez For 2010 Tax YearPrintable 1040ez Form1040ez Amended FormFree E-file 2012Turbo Tax Filing1040ez Online Tax ReturnTaxact2011onlineHow Do I Amend My 2009 Tax ReturnIrs Amendment FormFree Tax Filing For 20102010 1040ez2011 Tax Return Form 1040Tax Planning Us 2005 TaxesEfile 1040ezHow To File An Amendment2013 Tax Amendment FormAmended ReturnFile Tax Amendment2011 Taxact Online1040ez 2009Federal Tax Return 1040ez1090ezTurbo Tax 1040nr1041 Ez FormFiling A 1040x10ezCan I Efile My 2012 Taxes Now1040ez OnlineAmend A 2012 ReturnHow Can I File Taxes For 20122011 Free Tax FilingFree 2011 Tax FilingHnrblock ComAmended Tax Return FormH&r Block Military Free FileHow To File An Amended Tax Return For 2009Irs Form 1040File Federal And State Taxes For FreeTax Filing Tips

Tax Planning Us File Your Own Taxes

Tax planning us file your own taxes Publication 3 - Introductory Material Table of Contents What's New Reminders IntroductionOrdering forms and publications. Tax planning us file your own taxes Tax questions. Tax planning us file your own taxes Useful Items - You may want to see: What's New Earned income credit. Tax planning us file your own taxes  The maximum income you can earn and still claim the earned income credit has increased. Tax planning us file your own taxes You may be able to take the earned income credit if you earned less than $46,227 ($51,567 for married filing jointly) if you have three or more qualifying children; $43,038 ($48,378 for married filing jointly) if you have two qualifying children; $37,870 ($43,210 for married filing jointly) if you have one qualifying child; and $14,340 ($19,680 for married filing jointly) if you do not have any qualifying children. Tax planning us file your own taxes See Earned Income Credit , later, under Credits. Tax planning us file your own taxes Standard mileage rate. Tax planning us file your own taxes  The standard mileage rate for the cost of operating your car for business use in 2013 is 56. Tax planning us file your own taxes 5 cents a mile. Tax planning us file your own taxes The standard mileage rate for operating your car during 2013 to get medical care or to move is 24 cents a mile. Tax planning us file your own taxes The standard mileage rate for charitable use of your vehicle is 14 cents a mile. Tax planning us file your own taxes Filing status for same-sex married couples. Tax planning us file your own taxes  If you have a same-sex spouse whom you legally married in a state (or foreign country) that recognizes same-sex marriage, you and your spouse generally must use the married filing jointly or married filing separately filing status on your 2013 return, even if you and your spouse now live in a state (or foreign country) that does not recognize same-sex marriage. Tax planning us file your own taxes See Filing Returns , later. Tax planning us file your own taxes Reminders Change of address. Tax planning us file your own taxes  If you change your mailing address, be sure to notify the Internal Revenue Service (IRS) using Form 8822, Change of Address. Tax planning us file your own taxes Mail it to the Internal Revenue Service Center for your old address. Tax planning us file your own taxes (Addresses for the Service Centers are on the back of the form. Tax planning us file your own taxes ) Use Form 8822-B, Change of Address or Responsible Party—Business, if you are changing a business address. Tax planning us file your own taxes Third party designee. Tax planning us file your own taxes  You can check the “Yes” box in the Third Party Designee area of your return to authorize the IRS to discuss your return with your preparer, a friend, a family member, or any other person you choose. Tax planning us file your own taxes This allows the IRS to call the person you identified as your designee to answer any questions that may arise during the processing of your tax return. Tax planning us file your own taxes It also allows your designee to perform certain actions. Tax planning us file your own taxes See your income tax instructions for details. Tax planning us file your own taxes Future developments. Tax planning us file your own taxes  For the latest information about developments related to Publication 3, such as legislation enacted after it was published, go to www. Tax planning us file your own taxes irs. Tax planning us file your own taxes gov/pub3. Tax planning us file your own taxes Photographs of missing children. Tax planning us file your own taxes  The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Tax planning us file your own taxes Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. Tax planning us file your own taxes You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. Tax planning us file your own taxes Introduction This publication covers the special tax situations of active members of the U. Tax planning us file your own taxes S. Tax planning us file your own taxes Armed Forces. Tax planning us file your own taxes It does not cover military pensions or veterans' benefits or give the basic tax rules that apply to all taxpayers. Tax planning us file your own taxes For information on military pensions or veterans' benefits, see Publication 525, Taxable and Nontaxable Income. Tax planning us file your own taxes If you need the basic tax rules or information on another subject not covered here, you can check our other free publications. Tax planning us file your own taxes See Publication 910, IRS Guide to Free Tax Services, for a list and descriptions of the different tax publications. Tax planning us file your own taxes For federal tax purposes, the U. Tax planning us file your own taxes S. Tax planning us file your own taxes Armed Forces includes commissioned officers, warrant officers, and enlisted personnel in all regular and reserve units under control of the Secretaries of the Defense, Army, Navy, and Air Force. Tax planning us file your own taxes The U. Tax planning us file your own taxes S. Tax planning us file your own taxes Armed Forces also includes the Coast Guard. Tax planning us file your own taxes It does not include the U. Tax planning us file your own taxes S. Tax planning us file your own taxes Merchant Marine or the American Red Cross. Tax planning us file your own taxes Members serving in an area designated or treated as a combat zone are granted special tax benefits. Tax planning us file your own taxes In the event an area ceases to be a combat zone, the IRS will do its best to notify you. Tax planning us file your own taxes Many of the relief provisions will end at that time. Tax planning us file your own taxes Comments and suggestions. Tax planning us file your own taxes   We welcome your comments about this publication and your suggestions for future editions. Tax planning us file your own taxes   You can write to us at the following address: Internal Revenue Service Tax Forms and Publications Division 1111 Constitution Ave. Tax planning us file your own taxes NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. Tax planning us file your own taxes Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. Tax planning us file your own taxes   You can send your comments from www. Tax planning us file your own taxes irs. Tax planning us file your own taxes gov/formspubs. Tax planning us file your own taxes Click on “More Information” and then on “Comment on Tax Forms and Publications. Tax planning us file your own taxes ”   Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products. Tax planning us file your own taxes Ordering forms and publications. Tax planning us file your own taxes   Visit www. Tax planning us file your own taxes irs. Tax planning us file your own taxes gov/formspubs to download forms and publications, call 1-800-TAX-FORM (1-800-829-3676), or write to the address below and receive a response within 10 days after your request is received. Tax planning us file your own taxes Internal Revenue Service 1201 N. Tax planning us file your own taxes Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. Tax planning us file your own taxes   If you have a tax question, check the information available on IRS. Tax planning us file your own taxes gov or call 1-800-829-1040. Tax planning us file your own taxes We cannot answer tax questions sent to either of the above addresses. Tax planning us file your own taxes Useful Items - You may want to see: Publication 54 Tax Guide for U. Tax planning us file your own taxes S. Tax planning us file your own taxes Citizens and Resident Aliens Abroad 463 Travel, Entertainment, Gift, and Car Expenses 501 Exemptions, Standard Deduction, and Filing Information 503 Child and Dependent Care Expenses 505 Tax Withholding and Estimated Tax 516 U. Tax planning us file your own taxes S. Tax planning us file your own taxes Government Civilian Employees Stationed Abroad 519 U. Tax planning us file your own taxes S. Tax planning us file your own taxes Tax Guide for Aliens 521 Moving Expenses 523 Selling Your Home 525 Taxable and Nontaxable Income 527 Residential Rental Property 529 Miscellaneous Deductions 559 Survivors, Executors, and Administrators 590 Individual Retirement Arrangements (IRAs) 596 Earned Income Credit (EIC) 970 Tax Benefits for Education 3920 Tax Relief for Victims of Terrorist Attacks Form (and Instructions) 1040X Amended U. Tax planning us file your own taxes S. Tax planning us file your own taxes Individual Income Tax Return 1310 Statement of Person Claiming Refund Due a Deceased Taxpayer 2848 Power of Attorney and Declaration of Representative 3903 Moving Expenses 4868 Application for Automatic Extension of Time To File U. Tax planning us file your own taxes S. Tax planning us file your own taxes Individual Income Tax Return 8822 Change of Address 8822-B Change of Address or Responsible Party—Business 9465 Installment Agreement Request See How To Get Tax Help near the end of this publication, for information about getting IRS publications and forms. Tax planning us file your own taxes Prev  Up  Next   Home   More Online Publications
Print - Click this link to Print this page

If You Send Us Information Online

Our website offers the opportunity to ask questions, request information, or to obtain other services. Use of these options is voluntary. By furnishing the requested information, you are deemed to have consented to use of your data. We will use the information you provide only for the reasons you provided it.

To enable us to respond to your requests, you may need to provide personal or tax information. Please read the supplemental Privacy statements that appear and know that whenever we request such information, it will be used only for the purposes you provide it.

Your personal information will not be retained any longer than is necessary to provide the service. Your personal information will not be sold or shared with any other party except as required by law. The information will be disposed of in accordance with National Archives' records management rules relating to the maintenance of electronic data.

The confidentiality of Internet transactions is not guaranteed. You must decide if you want to assume the risk that an unauthorized person may learn your e-mail address or other information you may provide as it is transmitted. Once received by IRS your information is secured.

We will not e-mail refund information, account data, tax data, or other personal information as part of our response to you. If you would like us to answer a question that requires this type of information, please call us toll-free, 1-800-829-1040. You may also visit How to Contact Us in order to locate a specific IRS office that is convenient to you.

Return to Privacy Policy page
Page Last Reviewed or Updated: 22-Apr-2013

The Tax Planning Us File Your Own Taxes

Tax planning us file your own taxes 9. Tax planning us file your own taxes   Rental Income and Expenses Table of Contents Introduction Useful Items - You may want to see: Rental Income Rental ExpensesVacant while listed for sale. Tax planning us file your own taxes Repairs and Improvements Other Expenses Property Changed to Rental Use Renting Part of Property Not Rented for Profit Personal Use of Dwelling Unit (Including Vacation Home)Example. Tax planning us file your own taxes Dividing Expenses Dwelling Unit Used as a Home Reporting Income and Deductions DepreciationChanging your accounting method to deduct unclaimed depreciation. Tax planning us file your own taxes Limits on Rental LossesAt-Risk Rules Passive Activity Limits How To Report Rental Income and ExpensesSchedule E (Form 1040) Introduction This chapter discusses rental income and expenses. Tax planning us file your own taxes It also covers the following topics. Tax planning us file your own taxes Personal use of dwelling unit (including vacation home). Tax planning us file your own taxes Depreciation. Tax planning us file your own taxes Limits on rental losses. Tax planning us file your own taxes How to report your rental income and expenses. Tax planning us file your own taxes If you sell or otherwise dispose of your rental property, see Publication 544, Sales and Other Dispositions of Assets. Tax planning us file your own taxes If you have a loss from damage to, or theft of, rental property, see Publication 547, Casualties, Disasters, and Thefts. Tax planning us file your own taxes If you rent a condominium or a cooperative apartment, some special rules apply to you even though you receive the same tax treatment as other owners of rental property. Tax planning us file your own taxes See Publication 527, Residential Rental Property, for more information. Tax planning us file your own taxes Useful Items - You may want to see: Publication 527 Residential Rental Property 534 Depreciating Property Placed in Service Before 1987 535 Business Expenses 925 Passive Activity and At-Risk Rules 946 How To Depreciate Property Form (and Instructions) 4562 Depreciation and Amortization 6251 Alternative Minimum Tax—Individuals 8582 Passive Activity Loss Limitations Schedule E (Form 1040) Supplemental Income and Loss Rental Income In most cases, you must include in your gross income all amounts you receive as rent. Tax planning us file your own taxes Rental income is any payment you receive for the use or occupation of property. Tax planning us file your own taxes In addition to amounts you receive as normal rent payments, there are other amounts that may be rental income. Tax planning us file your own taxes When to report. Tax planning us file your own taxes   If you are a cash-basis taxpayer, you report rental income on your return for the year you actually or constructively receive it. Tax planning us file your own taxes You are a cash-basis taxpayer if you report income in the year you receive it, regardless of when it was earned. Tax planning us file your own taxes You constructively receive income when it is made available to you, for example, by being credited to your bank account. Tax planning us file your own taxes   For more information about when you constructively receive income, see Accounting Methods in chapter 1. Tax planning us file your own taxes Advance rent. Tax planning us file your own taxes   Advance rent is any amount you receive before the period that it covers. Tax planning us file your own taxes Include advance rent in your rental income in the year you receive it regardless of the period covered or the method of accounting you use. Tax planning us file your own taxes Example. Tax planning us file your own taxes You sign a 10-year lease to rent your property. Tax planning us file your own taxes In the first year, you receive $5,000 for the first year's rent and $5,000 as rent for the last year of the lease. Tax planning us file your own taxes You must include $10,000 in your income in the first year. Tax planning us file your own taxes Canceling a lease. Tax planning us file your own taxes   If your tenant pays you to cancel a lease, the amount you receive is rent. Tax planning us file your own taxes Include the payment in your income in the year you receive it regardless of your method of accounting. Tax planning us file your own taxes Expenses paid by tenant. Tax planning us file your own taxes   If your tenant pays any of your expenses, the payments are rental income. Tax planning us file your own taxes Because you must include this amount in income, you can deduct the expenses if they are deductible rental expenses. Tax planning us file your own taxes See Rental Expenses , later, for more information. Tax planning us file your own taxes Property or services. Tax planning us file your own taxes   If you receive property or services, instead of money, as rent, include the fair market value of the property or services in your rental income. Tax planning us file your own taxes   If the services are provided at an agreed upon or specified price, that price is the fair market value unless there is evidence to the contrary. Tax planning us file your own taxes Security deposits. Tax planning us file your own taxes   Do not include a security deposit in your income when you receive it if you plan to return it to your tenant at the end of the lease. Tax planning us file your own taxes But if you keep part or all of the security deposit during any year because your tenant does not live up to the terms of the lease, include the amount you keep in your income in that year. Tax planning us file your own taxes   If an amount called a security deposit is to be used as a final payment of rent, it is advance rent. Tax planning us file your own taxes Include it in your income when you receive it. Tax planning us file your own taxes Part interest. Tax planning us file your own taxes   If you own a part interest in rental property, you must report your part of the rental income from the property. Tax planning us file your own taxes Rental of property also used as your home. Tax planning us file your own taxes   If you rent property that you also use as your home and you rent it less than 15 days during the tax year, do not include the rent you receive in your income and do not deduct rental expenses. Tax planning us file your own taxes However, you can deduct on Schedule A (Form 1040) the interest, taxes, and casualty and theft losses that are allowed for nonrental property. Tax planning us file your own taxes See Personal Use of Dwelling Unit (Including Vacation Home) , later. Tax planning us file your own taxes Rental Expenses This part discusses expenses of renting property that you ordinarily can deduct from your rental income. Tax planning us file your own taxes It includes information on the expenses you can deduct if you rent part of your property, or if you change your property to rental use. Tax planning us file your own taxes Depreciation , which you can also deduct from your rental income, is discussed later. Tax planning us file your own taxes Personal use of rental property. Tax planning us file your own taxes   If you sometimes use your rental property for personal purposes, you must divide your expenses between rental and personal use. Tax planning us file your own taxes Also, your rental expense deductions may be limited. Tax planning us file your own taxes See Personal Use of Dwelling Unit (Including Vacation Home) , later. Tax planning us file your own taxes Part interest. Tax planning us file your own taxes   If you own a part interest in rental property, you can deduct expenses that you paid according to your percentage of ownership. Tax planning us file your own taxes When to deduct. Tax planning us file your own taxes   If you are a cash-basis taxpayer, you generally deduct your rental expenses in the year you pay them. Tax planning us file your own taxes Depreciation. Tax planning us file your own taxes   You can begin to depreciate rental property when it is ready and available for rent. Tax planning us file your own taxes See Placed-in-Service under When Does Depreciation Begin and End in chapter 2 of Publication 527. Tax planning us file your own taxes Pre-rental expenses. Tax planning us file your own taxes   You can deduct your ordinary and necessary expenses for managing, conserving, or maintaining rental property from the time you make it available for rent. Tax planning us file your own taxes Uncollected rent. Tax planning us file your own taxes   If you are a cash-basis taxpayer, do not deduct uncollected rent. Tax planning us file your own taxes Because you have not included it in your income, it is not deductible. Tax planning us file your own taxes Vacant rental property. Tax planning us file your own taxes   If you hold property for rental purposes, you may be able to deduct your ordinary and necessary expenses (including depreciation) for managing, conserving, or maintaining the property while the property is vacant. Tax planning us file your own taxes However, you cannot deduct any loss of rental income for the period the property is vacant. Tax planning us file your own taxes Vacant while listed for sale. Tax planning us file your own taxes   If you sell property you held for rental purposes, you can deduct the ordinary and necessary expenses for managing, conserving, or maintaining the property until it is sold. Tax planning us file your own taxes If the property is not held out and available for rent while listed for sale, the expenses are not deductible rental expenses. Tax planning us file your own taxes Repairs and Improvements Generally, an expense for repairing or maintaining your rental property may be deducted if you are not required to capitalize the expense. Tax planning us file your own taxes Improvements. Tax planning us file your own taxes   You must capitalize any expense you pay to improve your rental property. Tax planning us file your own taxes An expense is for an improvement if it results in a betterment to your property, restores your property, or adapts your property to a new or different use. Tax planning us file your own taxes Betterments. Tax planning us file your own taxes   Expenses that may result in a betterment to your property include expenses for fixing a pre-existing defect or condition, enlarging or expanding your property, or increasing the capacity, strength, or quality of your property. Tax planning us file your own taxes Restoration. Tax planning us file your own taxes   Expenses that may be for restoration include expenses for replacing a substantial structural part of your property, repairing damage to your property after you properly adjusted the basis of your property as a result of a casualty loss, or rebuilding your property to a like-new condition. Tax planning us file your own taxes Adaptation. Tax planning us file your own taxes   Expenses that may be for adaptation include expenses for altering your property to a use that is not consistent with the intended ordinary use of your property when you began renting the property. Tax planning us file your own taxes Separate the costs of repairs and improvements, and keep accurate records. Tax planning us file your own taxes You will need to know the cost of improvements when you sell or depreciate your property. Tax planning us file your own taxes The expenses you capitalize for improving your property can generally be depreciated as if the improvement were separate property. Tax planning us file your own taxes Other Expenses Other expenses you can deduct from your rental income include advertising, cleaning and maintenance, utilities, fire and liability insurance, taxes, interest, commissions for the collection of rent, ordinary and necessary travel and transportation, and other expenses, discussed next. Tax planning us file your own taxes Insurance premiums paid in advance. Tax planning us file your own taxes   If you pay an insurance premium for more than one year in advance, for each year of coverage you can deduct the part of the premium payment that will apply to that year. Tax planning us file your own taxes You cannot deduct the total premium in the year you pay it. Tax planning us file your own taxes Legal and other professional fees. Tax planning us file your own taxes   You can deduct, as a rental expense, legal and other professional expenses, such as tax return preparation fees you paid to prepare Schedule E (Form 1040), Part I. Tax planning us file your own taxes For example, on your 2013 Schedule E, you can deduct fees paid in 2013 to prepare your 2012 Schedule E, Part I. Tax planning us file your own taxes You can also deduct, as a rental expense, any expense (other than federal taxes and penalties) you paid to resolve a tax underpayment related to your rental activities. Tax planning us file your own taxes Local benefit taxes. Tax planning us file your own taxes   In most cases, you cannot deduct charges for local benefits that increase the value of your property, such as charges for putting in streets, sidewalks, or water and sewer systems. Tax planning us file your own taxes These charges are nondepreciable capital expenditures, and must be added to the basis of your property. Tax planning us file your own taxes However, you can deduct local benefit taxes that are for maintaining, repairing, or paying interest charges for the benefits. Tax planning us file your own taxes Local transportation expenses. Tax planning us file your own taxes    You may be able to deduct your ordinary and necessary local transportation expenses if you incur them to collect rental income or to manage, conserve, or maintain your rental property. Tax planning us file your own taxes However, transportation expenses incurred to travel between your home and a rental property generally constitute nondeductible commuting costs unless you use your home as your principal place of business. Tax planning us file your own taxes See Publication 587, Business Use of Your Home, for information on determining if your home office qualifies as a principal place of business. Tax planning us file your own taxes   Generally, if you use your personal car, pickup truck, or light van for rental activities, you can deduct the expenses using one of two methods: actual expenses or the standard mileage rate. Tax planning us file your own taxes For 2013, the standard mileage rate for business use is 56. Tax planning us file your own taxes 5 cents per mile. Tax planning us file your own taxes For more information, see chapter 26. Tax planning us file your own taxes    To deduct car expenses under either method, you must keep records that follow the rules in chapter 26. Tax planning us file your own taxes In addition, you must complete Form 4562, Part V, and attach it to your tax return. Tax planning us file your own taxes Rental of equipment. Tax planning us file your own taxes   You can deduct the rent you pay for equipment that you use for rental purposes. Tax planning us file your own taxes However, in some cases, lease contracts are actually purchase contracts. Tax planning us file your own taxes If so, you cannot deduct these payments. Tax planning us file your own taxes You can recover the cost of purchased equipment through depreciation. Tax planning us file your own taxes Rental of property. Tax planning us file your own taxes   You can deduct the rent you pay for property that you use for rental purposes. Tax planning us file your own taxes If you buy a leasehold for rental purposes, you can deduct an equal part of the cost each year over the term of the lease. Tax planning us file your own taxes Travel expenses. Tax planning us file your own taxes   You can deduct the ordinary and necessary expenses of traveling away from home if the primary purpose of the trip is to collect rental income or to manage, conserve, or maintain your rental property. Tax planning us file your own taxes You must properly allocate your expenses between rental and nonrental activities. Tax planning us file your own taxes You cannot deduct the cost of traveling away from home if the primary purpose of the trip was to improve your property. Tax planning us file your own taxes You recover the cost of improvements by taking depreciation. Tax planning us file your own taxes For information on travel expenses, see chapter 26. Tax planning us file your own taxes    To deduct travel expenses, you must keep records that follow the rules in chapter 26. Tax planning us file your own taxes   See Rental Expenses in Publication 527 for more information. Tax planning us file your own taxes Property Changed to Rental Use If you change your home or other property (or a part of it) to rental use at any time other than the beginning of your tax year, you must divide yearly expenses, such as taxes and insurance, between rental use and personal use. Tax planning us file your own taxes You can deduct as rental expenses only the part of the expense that is for the part of the year the property was used or held for rental purposes. Tax planning us file your own taxes You cannot deduct depreciation or insurance for the part of the year the property was held for personal use. Tax planning us file your own taxes However, you can include the home mortgage interest, qualified mortgage insurance premiums, and real estate tax expenses for the part of the year the property was held for personal use as an itemized deduction on Schedule A (Form 1040). Tax planning us file your own taxes Example. Tax planning us file your own taxes Your tax year is the calendar year. Tax planning us file your own taxes You moved from your home in May and started renting it out on June 1. Tax planning us file your own taxes You can deduct as rental expenses seven-twelfths of your yearly expenses, such as taxes and insurance. Tax planning us file your own taxes Starting with June, you can deduct as rental expenses the amounts you pay for items generally billed monthly, such as utilities. Tax planning us file your own taxes Renting Part of Property If you rent part of your property, you must divide certain expenses between the part of the property used for rental purposes and the part of the property used for personal purposes, as though you actually had two separate pieces of property. Tax planning us file your own taxes You can deduct the expenses related to the part of the property used for rental purposes, such as home mortgage interest, qualified mortgage insurance premiums, and real estate taxes, as rental expenses on Schedule E (Form 1040). Tax planning us file your own taxes You can also deduct as rental expenses a portion of other expenses that normally are nondeductible personal expenses, such as expenses for electricity or painting the outside of your house. Tax planning us file your own taxes There is no change in the types of expenses deductible for the personal-use part of your property. Tax planning us file your own taxes Generally, these expenses may be deducted only if you itemize your deductions on Schedule A (Form 1040). Tax planning us file your own taxes You cannot deduct any part of the cost of the first phone line even if your tenants have unlimited use of it. Tax planning us file your own taxes You do not have to divide the expenses that belong only to the rental part of your property. Tax planning us file your own taxes For example, if you paint a room that you rent, or if you pay premiums for liability insurance in connection with renting a room in your home, your entire cost is a rental expense. Tax planning us file your own taxes If you install a second phone line strictly for your tenants' use, all of the cost of the second line is deductible as a rental expense. Tax planning us file your own taxes You can deduct depreciation, discussed later, on the part of the house used for rental purposes as well as on the furniture and equipment you use for rental purposes. Tax planning us file your own taxes How to divide expenses. Tax planning us file your own taxes   If an expense is for both rental use and personal use, such as mortgage interest or heat for the entire house, you must divide the expense between the rental use and the personal use. Tax planning us file your own taxes You can use any reasonable method for dividing the expense. Tax planning us file your own taxes It may be reasonable to divide the cost of some items (for example, water) based on the number of people using them. Tax planning us file your own taxes The two most common methods for dividing an expense are based on (1) the number of rooms in your home, and (2) the square footage of your home. Tax planning us file your own taxes Not Rented for Profit If you do not rent your property to make a profit, you can deduct your rental expenses only up to the amount of your rental income. Tax planning us file your own taxes You cannot deduct a loss or carry forward to the next year any rental expenses that are more than your rental income for the year. Tax planning us file your own taxes For more information about the rules for an activity not engaged in for profit, see Not-for-Profit Activities in chapter 1 of Publication 535. Tax planning us file your own taxes Where to report. Tax planning us file your own taxes   Report your not-for-profit rental income on Form 1040, line 21. Tax planning us file your own taxes For example, you can include your mortgage interest and any qualified mortgage insurance premiums (if you use the property as your main home or second home), real estate taxes, and casualty losses on the appropriate lines of Schedule A (Form 1040) if you itemize your deductions. Tax planning us file your own taxes   If you itemize your deductions, claim your other rental expenses, subject to the rules explained in chapter 1 of Publication 535, as miscellaneous itemized deductions on Form 1040, Schedule A, line 23. Tax planning us file your own taxes You can deduct these expenses only if they, together with certain other miscellaneous itemized deductions, total more than 2% of your adjusted gross income. Tax planning us file your own taxes Personal Use of Dwelling Unit (Including Vacation Home) If you have any personal use of a dwelling unit (including a vacation home) that you rent, you must divide your expenses between rental use and personal use. Tax planning us file your own taxes In general, your rental expenses will be no more than your total expenses multiplied by a fraction; the denominator of which is the total number of days the dwelling unit is used and the numerator of which is the total number of days actually rented at a fair rental price. Tax planning us file your own taxes Only your rental expenses may be deducted on Schedule E (Form 1040). Tax planning us file your own taxes Some of your personal expenses may be deductible if you itemize your deductions on Schedule A (Form 1040). Tax planning us file your own taxes You must also determine if the dwelling unit is considered a home. Tax planning us file your own taxes The amount of rental expenses that you can deduct may be limited if the dwelling unit is considered a home. Tax planning us file your own taxes Whether a dwelling unit is considered a home depends on how many days during the year are considered to be days of personal use. Tax planning us file your own taxes There is a special rule if you used the dwelling unit as a home and you rented it for less than 15 days during the year. Tax planning us file your own taxes Dwelling unit. Tax planning us file your own taxes   A dwelling unit includes a house, apartment, condominium, mobile home, boat, vacation home, or similar property. Tax planning us file your own taxes It also includes all structures or other property belonging to the dwelling unit. Tax planning us file your own taxes A dwelling unit has basic living accommodations, such as sleeping space, a toilet, and cooking facilities. Tax planning us file your own taxes   A dwelling unit does not include property used solely as a hotel, motel, inn, or similar establishment. Tax planning us file your own taxes Property is used solely as a hotel, motel, inn, or similar establishment if it is regularly available for occupancy by paying customers and is not used by an owner as a home during the year. Tax planning us file your own taxes Example. Tax planning us file your own taxes   You rent a room in your home that is always available for short-term occupancy by paying customers. Tax planning us file your own taxes You do not use the room yourself, and you allow only paying customers to use the room. Tax planning us file your own taxes The room is used solely as a hotel, motel, inn, or similar establishment and is not a dwelling unit. Tax planning us file your own taxes Dividing Expenses If you use a dwelling unit for both rental and personal purposes, divide your expenses between the rental use and the personal use based on the number of days used for each purpose. Tax planning us file your own taxes When dividing your expenses, follow these rules. Tax planning us file your own taxes Any day that the unit is rented at a fair rental price is a day of rental use even if you used the unit for personal purposes that day. Tax planning us file your own taxes This rule does not apply when determining whether you used the unit as a home. Tax planning us file your own taxes Any day that the unit is available for rent but not actually rented is not a day of rental use. Tax planning us file your own taxes Example. Tax planning us file your own taxes Your beach cottage was available for rent from June 1 through August 31 (92 days). Tax planning us file your own taxes During that time, except for the first week in August (7 days) when you were unable to find a renter, you rented the cottage at a fair rental price. Tax planning us file your own taxes The person who rented the cottage for July allowed you to use it over the weekend (2 days) without any reduction in or refund of rent. Tax planning us file your own taxes Your family also used the cottage during the last 2 weeks of May (14 days). Tax planning us file your own taxes The cottage was not used at all before May 17 or after August 31. Tax planning us file your own taxes You figure the part of the cottage expenses to treat as rental expenses as follows. Tax planning us file your own taxes The cottage was used for rental a total of 85 days (92 − 7). Tax planning us file your own taxes The days it was available for rent but not rented (7 days) are not days of rental use. Tax planning us file your own taxes The July weekend (2 days) you used it is rental use because you received a fair rental price for the weekend. Tax planning us file your own taxes You used the cottage for personal purposes for 14 days (the last 2 weeks in May). Tax planning us file your own taxes The total use of the cottage was 99 days (14 days personal use + 85 days rental use). Tax planning us file your own taxes Your rental expenses are 85/99 (86%) of the cottage expenses. Tax planning us file your own taxes Note. Tax planning us file your own taxes When determining whether you used the cottage as a home, the July weekend (2 days) you used it is considered personal use even though you received a fair rental price for the weekend. Tax planning us file your own taxes Therefore, you had 16 days of personal use and 83 days of rental use for this purpose. Tax planning us file your own taxes Because you used the cottage for personal purposes more than 14 days and more than 10% of the days of rental use (8 days), you used it as a home. Tax planning us file your own taxes If you have a net loss, you may not be able to deduct all of the rental expenses. Tax planning us file your own taxes See Dwelling Unit Used as a Home, next. Tax planning us file your own taxes Dwelling Unit Used as a Home If you use a dwelling unit for both rental and personal purposes, the tax treatment of the rental expenses you figured earlier under Dividing Expenses and rental income depends on whether you are considered to be using the dwelling unit as a home. Tax planning us file your own taxes You use a dwelling unit as a home during the tax year if you use it for personal purposes more than the greater of: 14 days, or 10% of the total days it is rented to others at a fair rental price. Tax planning us file your own taxes See What is a day of personal use , later. Tax planning us file your own taxes Fair rental price. Tax planning us file your own taxes   A fair rental price for your property generally is the amount of rent that a person who is not related to you would be willing to pay. Tax planning us file your own taxes The rent you charge is not a fair rental price if it is substantially less than the rents charged for other properties that are similar to your property in your area. Tax planning us file your own taxes   If a dwelling unit is used for personal purposes on a day it is rented at a fair rental price, do not count that day as a day of rental use in applying (2) above. Tax planning us file your own taxes Instead, count it as a day of personal use in applying both (1) and (2) above. Tax planning us file your own taxes What is a day of personal use?   A day of personal use of a dwelling unit is any day that the unit is used by any of the following persons. Tax planning us file your own taxes You or any other person who has an interest in the unit, unless you rent it to another owner as his or her main home under a shared equity financing agreement (defined later). Tax planning us file your own taxes However, see Days used as a main home before or after renting , later. Tax planning us file your own taxes A member of your family or a member of the family of any other person who owns an interest in the unit, unless the family member uses the dwelling unit as his or her main home and pays a fair rental price. Tax planning us file your own taxes Family includes only your spouse, brothers and sisters, half-brothers and half-sisters, ancestors (parents, grandparents, etc. Tax planning us file your own taxes ), and lineal descendants (children, grandchildren, etc. Tax planning us file your own taxes ). Tax planning us file your own taxes Anyone under an arrangement that lets you use some other dwelling unit. Tax planning us file your own taxes Anyone at less than a fair rental price. Tax planning us file your own taxes Main home. Tax planning us file your own taxes   If the other person or member of the family in (1) or (2) above has more than one home, his or her main home is ordinarily the one he or she lived in most of the time. Tax planning us file your own taxes Shared equity financing agreement. Tax planning us file your own taxes   This is an agreement under which two or more persons acquire undivided interests for more than 50 years in an entire dwelling unit, including the land, and one or more of the co-owners is entitled to occupy the unit as his or her main home upon payment of rent to the other co-owner or owners. Tax planning us file your own taxes Donation of use of property. Tax planning us file your own taxes   You use a dwelling unit for personal purposes if: You donate the use of the unit to a charitable organization, The organization sells the use of the unit at a fund-raising event, and The “purchaser” uses the unit. Tax planning us file your own taxes Examples. Tax planning us file your own taxes   The following examples show how to determine days of personal use. Tax planning us file your own taxes Example 1. Tax planning us file your own taxes You and your neighbor are co-owners of a condominium at the beach. Tax planning us file your own taxes Last year, you rented the unit to vacationers whenever possible. Tax planning us file your own taxes The unit was not used as a main home by anyone. Tax planning us file your own taxes Your neighbor used the unit for 2 weeks last year; you did not use it at all. Tax planning us file your own taxes Because your neighbor has an interest in the unit, both of you are considered to have used the unit for personal purposes during those 2 weeks. Tax planning us file your own taxes Example 2. Tax planning us file your own taxes You and your neighbors are co-owners of a house under a shared equity financing agreement. Tax planning us file your own taxes Your neighbors live in the house and pay you a fair rental price. Tax planning us file your own taxes Even though your neighbors have an interest in the house, the days your neighbors live there are not counted as days of personal use by you. Tax planning us file your own taxes This is because your neighbors rent the house as their main home under a shared equity financing agreement. Tax planning us file your own taxes Example 3. Tax planning us file your own taxes You own a rental property that you rent to your son. Tax planning us file your own taxes Your son does not own any interest in this property. Tax planning us file your own taxes He uses it as his main home and pays you a fair rental price. Tax planning us file your own taxes Your son's use of the property is not personal use by you because your son is using it as his main home, he owns no interest in the property, and he is paying you a fair rental price. Tax planning us file your own taxes Example 4. Tax planning us file your own taxes You rent your beach house to Joshua. Tax planning us file your own taxes Joshua rents his cabin in the mountains to you. Tax planning us file your own taxes You each pay a fair rental price. Tax planning us file your own taxes You are using your house for personal purposes on the days that Joshua uses it because your house is used by Joshua under an arrangement that allows you to use his house. Tax planning us file your own taxes Days used for repairs and maintenance. Tax planning us file your own taxes   Any day that you spend working substantially full time repairing and maintaining (not improving) your property is not counted as a day of personal use. Tax planning us file your own taxes Do not count such a day as a day of personal use even if family members use the property for recreational purposes on the same day. Tax planning us file your own taxes Days used as a main home before or after renting. Tax planning us file your own taxes   For purposes of determining whether a dwelling unit was used as a home, you may not have to count days you used the property as your main home before or after renting it or offering it for rent as days of personal use. Tax planning us file your own taxes Do not count them as days of personal use if: You rented or tried to rent the property for 12 or more consecutive months. Tax planning us file your own taxes You rented or tried to rent the property for a period of less than 12 consecutive months and the period ended because you sold or exchanged the property. Tax planning us file your own taxes However, this special rule does not apply when dividing expenses between rental and personal use. Tax planning us file your own taxes Examples. Tax planning us file your own taxes   The following examples show how to determine whether you used your rental property as a home. Tax planning us file your own taxes Example 1. Tax planning us file your own taxes You converted the basement of your home into an apartment with a bedroom, a bathroom, and a small kitchen. Tax planning us file your own taxes You rented the basement apartment at a fair rental price to college students during the regular school year. Tax planning us file your own taxes You rented to them on a 9-month lease (273 days). Tax planning us file your own taxes You figured 10% of the total days rented to others at a fair rental price is 27 days. Tax planning us file your own taxes During June (30 days), your brothers stayed with you and lived in the basement apartment rent free. Tax planning us file your own taxes Your basement apartment was used as a home because you used it for personal purposes for 30 days. Tax planning us file your own taxes Rent-free use by your brothers is considered personal use. Tax planning us file your own taxes Your personal use (30 days) is more than the greater of 14 days or 10% of the total days it was rented (27 days). Tax planning us file your own taxes Example 2. Tax planning us file your own taxes You rented the guest bedroom in your home at a fair rental price during the local college's homecoming, commencement, and football weekends (a total of 27 days). Tax planning us file your own taxes Your sister-in-law stayed in the room, rent free, for the last 3 weeks (21 days) in July. Tax planning us file your own taxes You figured 10% of the total days rented to others at a fair rental price is 3 days. Tax planning us file your own taxes The room was used as a home because you used it for personal purposes for 21 days. Tax planning us file your own taxes That is more than the greater of 14 days or 10% of the 27 days it was rented (3 days). Tax planning us file your own taxes Example 3. Tax planning us file your own taxes You own a condominium apartment in a resort area. Tax planning us file your own taxes You rented it at a fair rental price for a total of 170 days during the year. Tax planning us file your own taxes For 12 of those days, the tenant was not able to use the apartment and allowed you to use it even though you did not refund any of the rent. Tax planning us file your own taxes Your family actually used the apartment for 10 of those days. Tax planning us file your own taxes Therefore, the apartment is treated as having been rented for 160 (170 − 10) days. Tax planning us file your own taxes You figured 10% of the total days rented to others at a fair rental price is 16 days. Tax planning us file your own taxes Your family also used the apartment for 7 other days during the year. Tax planning us file your own taxes You used the apartment as a home because you used it for personal purposes for 17 days. Tax planning us file your own taxes That is more than the greater of 14 days or 10% of the 160 days it was rented (16 days). Tax planning us file your own taxes Minimal rental use. Tax planning us file your own taxes   If you use the dwelling unit as a home and you rent it less than 15 days during the year, that period is not treated as rental activity. Tax planning us file your own taxes See Used as a home but rented less than 15 days , later, for more information. Tax planning us file your own taxes Limit on deductions. Tax planning us file your own taxes   Renting a dwelling unit that is considered a home is not a passive activity. Tax planning us file your own taxes Instead, if your rental expenses are more than your rental income, some or all of the excess expenses cannot be used to offset income from other sources. Tax planning us file your own taxes The excess expenses that cannot be used to offset income from other sources are carried forward to the next year and treated as rental expenses for the same property. Tax planning us file your own taxes Any expenses carried forward to the next year will be subject to any limits that apply for that year. Tax planning us file your own taxes This limitation will apply to expenses carried forward to another year even if you do not use the property as your home for that subsequent year. Tax planning us file your own taxes   To figure your deductible rental expenses for this year and any carryover to next year, use Worksheet 9-1. Tax planning us file your own taxes Reporting Income and Deductions Property not used for personal purposes. Tax planning us file your own taxes   If you do not use a dwelling unit for personal purposes, see How To Report Rental Income and Expenses , later, for how to report your rental income and expenses. Tax planning us file your own taxes Property used for personal purposes. Tax planning us file your own taxes   If you do use a dwelling unit for personal purposes, then how you report your rental income and expenses depends on whether you used the dwelling unit as a home. Tax planning us file your own taxes Not used as a home. Tax planning us file your own taxes   If you use a dwelling unit for personal purposes, but not as a home, report all the rental income in your income. Tax planning us file your own taxes Since you used the dwelling unit for personal purposes, you must divide your expenses between the rental use and the personal use as described earlier in Dividing Expenses . Tax planning us file your own taxes The expenses for personal use are not deductible as rental expenses. Tax planning us file your own taxes   Your deductible rental expenses can be more than your gross rental income; however, see Limits on Rental Losses , later. Tax planning us file your own taxes Used as a home but rented less than 15 days. Tax planning us file your own taxes   If you use a dwelling unit as a home and you rent it less than 15 days during the year, its primary function is not considered to be rental and it should not be reported on Schedule E (Form 1040). Tax planning us file your own taxes You are not required to report the rental income and rental expenses from this activity. Tax planning us file your own taxes The expenses, including qualified mortgage interest, property taxes, and any qualified casualty loss will be reported as normally allowed on Schedule A (Form 1040). Tax planning us file your own taxes See the Instructions for Schedule A (Form 1040) for more information on deducting these expenses. Tax planning us file your own taxes Used as a home and rented 15 days or more. Tax planning us file your own taxes   If you use a dwelling unit as a home and rent it 15 days or more during the year, include all your rental income in your income. Tax planning us file your own taxes Since you used the dwelling unit for personal purposes, you must divide your expenses between the rental use and the personal use as described earlier in Dividing Expenses . Tax planning us file your own taxes The expenses for personal use are not deductible as rental expenses. Tax planning us file your own taxes   If you had a net profit from renting the dwelling unit for the year (that is, if your rental income is more than the total of your rental expenses, including depreciation), deduct all of your rental expenses. Tax planning us file your own taxes You do not need to use Worksheet 9-1. Tax planning us file your own taxes   However, if you had a net loss from renting the dwelling unit for the year, your deduction for certain rental expenses is limited. Tax planning us file your own taxes To figure your deductible rental expenses and any carryover to next year, use Worksheet 9-1. Tax planning us file your own taxes Depreciation You recover the cost of income-producing property through yearly tax deductions. Tax planning us file your own taxes You do this by depreciating the property; that is, by deducting some of the cost each year on your tax return. Tax planning us file your own taxes Three factors determine how much depreciation you can deduct each year: (1) your basis in the property, (2) the recovery period for the property, and (3) the depreciation method used. Tax planning us file your own taxes You cannot simply deduct your mortgage or principal payments, or the cost of furniture, fixtures, and equipment, as an expense. Tax planning us file your own taxes You can deduct depreciation only on the part of your property used for rental purposes. Tax planning us file your own taxes Depreciation reduces your basis for figuring gain or loss on a later sale or exchange. Tax planning us file your own taxes You may have to use Form 4562 to figure and report your depreciation. Tax planning us file your own taxes See How To Report Rental Income and Expenses , later. Tax planning us file your own taxes Alternative minimum tax (AMT). Tax planning us file your own taxes    If you use accelerated depreciation, you may be subject to the AMT. Tax planning us file your own taxes Accelerated depreciation allows you to deduct more depreciation earlier in the recovery period than you could deduct using a straight line method (same deduction each year). Tax planning us file your own taxes Claiming the correct amount of depreciation. Tax planning us file your own taxes   You should claim the correct amount of depreciation each tax year. Tax planning us file your own taxes If you did not claim all the depreciation you were entitled to deduct, you must still reduce your basis in the property by the full amount of depreciation that you could have deducted. Tax planning us file your own taxes   If you deducted an incorrect amount of depreciation for property in any year, you may be able to make a correction by filing Form 1040X, Amended U. Tax planning us file your own taxes S Individual Income Tax Return. Tax planning us file your own taxes If you are not allowed to make the correction on an amended return, you can change your accounting method to claim the correct amount of depreciation. Tax planning us file your own taxes See Claiming the correct amount of depreciation in chapter 2 of Publication 527 for more information. Tax planning us file your own taxes Changing your accounting method to deduct unclaimed depreciation. Tax planning us file your own taxes   To change your accounting method, you generally must file Form 3115, Application for Change in Accounting Method, to get the consent of the IRS. Tax planning us file your own taxes In some instances, that consent is automatic. Tax planning us file your own taxes For more information, see chapter 1 of Publication 946. Tax planning us file your own taxes Land. Tax planning us file your own taxes   You cannot depreciate the cost of land because land generally does not wear out, become obsolete, or get used up. Tax planning us file your own taxes The costs of clearing, grading, planting, and landscaping are usually all part of the cost of land and cannot be depreciated. Tax planning us file your own taxes More information. Tax planning us file your own taxes   See Publication 527 for more information about depreciating rental property and see Publication 946 for more information about depreciation. Tax planning us file your own taxes Limits on Rental Losses If you have a loss from your rental real estate activity, two sets of rules may limit the amount of loss you can deduct. Tax planning us file your own taxes You must consider these rules in the order shown below. Tax planning us file your own taxes At-risk rules. Tax planning us file your own taxes These rules are applied first if there is investment in your rental real estate activity for which you are not at risk. Tax planning us file your own taxes This applies only if the real property was placed in service after 1986. Tax planning us file your own taxes Passive activity limits. Tax planning us file your own taxes Generally, rental real estate activities are considered passive activities and losses are not deductible unless you have income from other passive activities to offset them. Tax planning us file your own taxes However, there are exceptions. Tax planning us file your own taxes At-Risk Rules You may be subject to the at-risk rules if you have: A loss from an activity carried on as a trade or business or for the production of income, and Amounts invested in the activity for which you are not fully at risk. Tax planning us file your own taxes Losses from holding real property (other than mineral property) placed in service before 1987 are not subject to the at-risk rules. Tax planning us file your own taxes In most cases, any loss from an activity subject to the at-risk rules is allowed only to the extent of the total amount you have at risk in the activity at the end of the tax year. Tax planning us file your own taxes You are considered at risk in an activity to the extent of cash and the adjusted basis of other property you contributed to the activity and certain amounts borrowed for use in the activity. Tax planning us file your own taxes See Publication 925 for more information. Tax planning us file your own taxes Passive Activity Limits In most cases, all rental real estate activities (except those of certain real estate professionals, discussed later) are passive activities. Tax planning us file your own taxes For this purpose, a rental activity is an activity from which you receive income mainly for the use of tangible property, rather than for services. Tax planning us file your own taxes Limits on passive activity deductions and credits. Tax planning us file your own taxes    Deductions or losses from passive activities are limited. Tax planning us file your own taxes You generally cannot offset income, other than passive income, with losses from passive activities. Tax planning us file your own taxes Nor can you offset taxes on income, other than passive income, with credits resulting from passive activities. Tax planning us file your own taxes Any excess loss or credit is carried forward to the next tax year. Tax planning us file your own taxes   For a detailed discussion of these rules, see Publication 925. Tax planning us file your own taxes    You may have to complete Form 8582 to figure the amount of any passive activity loss for the current tax year for all activities and the amount of the passive activity loss allowed on your tax return. Tax planning us file your own taxes Real estate professionals. Tax planning us file your own taxes   Rental activities in which you materially participated during the year are not passive activities if, for that year, you were a real estate professional. Tax planning us file your own taxes For a detailed discussion of the requirements, see Publication 527. Tax planning us file your own taxes For a detailed discussion of material participation, see Publication 925. Tax planning us file your own taxes Exception for Personal Use of Dwelling Unit If you used the rental property as a home during the year, any income, deductions, gain, or loss allocable to such use shall not be taken into account for purposes of the passive activity loss limitation. Tax planning us file your own taxes Instead, follow the rules explained in Personal Use of Dwelling Unit (Including Vacation Home), earlier. Tax planning us file your own taxes Exception for Rental Real Estate Activities With Active Participation If you or your spouse actively participated in a passive rental real estate activity, you may be able to deduct up to $25,000 of loss from the activity from your nonpassive income. Tax planning us file your own taxes This special allowance is an exception to the general rule disallowing losses in excess of income from passive activities. Tax planning us file your own taxes Similarly, you may be able to offset credits from the activity against the tax on up to $25,000 of nonpassive income after taking into account any losses allowed under this exception. Tax planning us file your own taxes Active participation. Tax planning us file your own taxes   You actively participated in a rental real estate activity if you (and your spouse) owned at least 10% of the rental property and you made management decisions or arranged for others to provide services (such as repairs) in a significant and bona fide sense. Tax planning us file your own taxes Management decisions that may count as active participation include approving new tenants, deciding on rental terms, approving expenditures, and similar decisions. Tax planning us file your own taxes Maximum special allowance. Tax planning us file your own taxes   The maximum special allowance is: $25,000 for single individuals and married individuals filing a joint return for the tax year, $12,500 for married individuals who file separate returns for the tax year and lived apart from their spouses at all times during the tax year, and $25,000 for a qualifying estate reduced by the special allowance for which the surviving spouse qualified. Tax planning us file your own taxes   If your modified adjusted gross income (MAGI) is $100,000 or less ($50,000 or less if married filing separately), you can deduct your loss up to the amount specified above. Tax planning us file your own taxes If your MAGI is more than $100,000 (more than $50,000 if married filing separately), your special allowance is limited to 50% of the difference between $150,000 ($75,000 if married filing separately) and your MAGI. Tax planning us file your own taxes   Generally, if your MAGI is $150,000 or more ($75,000 or more if you are married filing separately), there is no special allowance. Tax planning us file your own taxes More information. Tax planning us file your own taxes   See Publication 925 for more information on the passive loss limits, including information on the treatment of unused disallowed passive losses and credits and the treatment of gains and losses realized on the disposition of a passive activity. Tax planning us file your own taxes How To Report Rental Income and Expenses The basic form for reporting residential rental income and expenses is Schedule E (Form 1040). Tax planning us file your own taxes However, do not use that schedule to report a not-for-profit activity. Tax planning us file your own taxes See Not Rented for Profit, earlier. Tax planning us file your own taxes Providing substantial services. Tax planning us file your own taxes   If you provide substantial services that are primarily for your tenant's convenience, such as regular cleaning, changing linen, or maid service, report your rental income and expenses on Schedule C (Form 1040), Profit or Loss From Business, or Schedule C-EZ (Form 1040), Net Profit From Business (Sole Proprietorship). Tax planning us file your own taxes Substantial services do not include the furnishing of heat and light, cleaning of public areas, trash collection, etc. Tax planning us file your own taxes For information, see Publication 334, Tax Guide for Small Business. Tax planning us file your own taxes You also may have to pay self-employment tax on your rental income using Schedule SE (Form 1040), Self-Employment Tax. Tax planning us file your own taxes   Use Form 1065, U. Tax planning us file your own taxes S. Tax planning us file your own taxes Return of Partnership Income, if your rental activity is a partnership (including a partnership with your spouse unless it is a qualified joint venture). Tax planning us file your own taxes Qualified joint venture. Tax planning us file your own taxes   If you and your spouse each materially participate as the only members of a jointly owned and operated real estate business, and you file a joint return for the tax year, you can make a joint election to be treated as a qualified joint venture instead of a partnership. Tax planning us file your own taxes This election, in most cases, will not increase the total tax owed on the joint return, but it does give each of you credit for social security earnings on which retirement benefits are based and for Medicare coverage if your rental income is subject to self-employment tax. Tax planning us file your own taxes For more information, see Publication 527. Tax planning us file your own taxes Form 1098, Mortgage Interest Statement. Tax planning us file your own taxes    If you paid $600 or more of mortgage interest on your rental property to any one person, you should receive a Form 1098, or similar statement showing the interest you paid for the year. Tax planning us file your own taxes If you and at least one other person (other than your spouse if you file a joint return) were liable for, and paid interest on the mortgage, and the other person received the Form 1098, report your share of the interest on Schedule E (Form 1040), line 13. Tax planning us file your own taxes Attach a statement to your return showing the name and address of the other person. Tax planning us file your own taxes In the left margin of Schedule E, next to line 13, enter “See attached. Tax planning us file your own taxes ” Schedule E (Form 1040) If you rent buildings, rooms, or apartments, and provide basic services such as heat and light, trash collection, etc. Tax planning us file your own taxes , you normally report your rental income and expenses on Schedule E, Part I. Tax planning us file your own taxes List your total income, expenses, and depreciation for each rental property. Tax planning us file your own taxes Be sure to enter the number of fair rental and personal use days on line 2. Tax planning us file your own taxes If you have more than three rental or royalty properties, complete and attach as many Schedules E as are needed to list the properties. Tax planning us file your own taxes Complete lines 1 and 2 for each property. Tax planning us file your own taxes However, fill in lines 23a through 26 on only one Schedule E. Tax planning us file your own taxes On Schedule E, page 1, line 18, enter the depreciation you are claiming for each property. Tax planning us file your own taxes To find out if you need to attach Form 4562, see Form 4562, in chapter 3 of Publication 527. Tax planning us file your own taxes If you have a loss from your rental real estate activity, you also may need to complete one or both of the following forms. Tax planning us file your own taxes Form 6198, At-Risk Limitations. Tax planning us file your own taxes See At-Risk Rules , earlier. Tax planning us file your own taxes Also see Publication 925. Tax planning us file your own taxes Form 8582, Passive Activity Loss Limitations. Tax planning us file your own taxes See Passive Activity Limits , earlier. Tax planning us file your own taxes Page 2 of Schedule E is used to report income or loss from partnerships, S corporations, estates, trusts, and real estate mortgage investment conduits. Tax planning us file your own taxes If you need to use page 2 of Schedule E, be sure to use page 2 of the same Schedule E you used to enter your rental activity on page 1. Tax planning us file your own taxes Also, include the amount from line 26 (Part I) in the “Total income or (loss)” on line 41 (Part V). Tax planning us file your own taxes Worksheet 9-1. Tax planning us file your own taxes Worksheet for Figuring Rental Deductions for a Dwelling Unit Used as a Home Use this worksheet only if you answer “yes” to all of the following questions. Tax planning us file your own taxes Did you use the dwelling unit as a home this year? (See Dwelling Unit Used as a Home . Tax planning us file your own taxes ) Did you rent the dwelling unit at a fair rental price 15 days or more this year? Is the total of your rental expenses and depreciation more than your rental income? PART I. Tax planning us file your own taxes Rental Use Percentage A. Tax planning us file your own taxes Total days available for rent at fair rental price A. Tax planning us file your own taxes       B. Tax planning us file your own taxes Total days available for rent (line A) but not rented B. Tax planning us file your own taxes       C. Tax planning us file your own taxes Total days of rental use. Tax planning us file your own taxes Subtract line B from line A C. Tax planning us file your own taxes       D. Tax planning us file your own taxes Total days of personal use (including days rented at less than fair rental price) D. Tax planning us file your own taxes       E. Tax planning us file your own taxes Total days of rental and personal use. Tax planning us file your own taxes Add lines C and D E. Tax planning us file your own taxes       F. Tax planning us file your own taxes Percentage of expenses allowed for rental. Tax planning us file your own taxes Divide line C by line E     F. Tax planning us file your own taxes   PART II. Tax planning us file your own taxes Allowable Rental Expenses 1. Tax planning us file your own taxes Enter rents received 1. Tax planning us file your own taxes   2a. Tax planning us file your own taxes Enter the rental portion of deductible home mortgage interest and qualified mortgage insurance premiums (see instructions) 2a. Tax planning us file your own taxes       b. Tax planning us file your own taxes Enter the rental portion of real estate taxes b. Tax planning us file your own taxes       c. Tax planning us file your own taxes Enter the rental portion of deductible casualty and theft losses (see instructions) c. Tax planning us file your own taxes       d. Tax planning us file your own taxes Enter direct rental expenses (see instructions) d. Tax planning us file your own taxes       e. Tax planning us file your own taxes Fully deductible rental expenses. Tax planning us file your own taxes Add lines 2a–2d. Tax planning us file your own taxes Enter here and  on the appropriate lines on Schedule E (see instructions) 2e. Tax planning us file your own taxes   3. Tax planning us file your own taxes Subtract line 2e from line 1. Tax planning us file your own taxes If zero or less, enter -0- 3. Tax planning us file your own taxes   4a. Tax planning us file your own taxes Enter the rental portion of expenses directly related to operating or maintaining  the dwelling unit (such as repairs, insurance, and utilities) 4a. Tax planning us file your own taxes       b. Tax planning us file your own taxes Enter the rental portion of excess mortgage interest and qualified mortgage insurance premiums (see instructions) b. Tax planning us file your own taxes       c. Tax planning us file your own taxes Carryover of operating expenses from 2012 worksheet c. Tax planning us file your own taxes       d. Tax planning us file your own taxes Add lines 4a–4c d. Tax planning us file your own taxes       e. Tax planning us file your own taxes Allowable expenses. Tax planning us file your own taxes Enter the smaller of line 3 or line 4d (see instructions) 4e. Tax planning us file your own taxes   5. Tax planning us file your own taxes Subtract line 4e from line 3. Tax planning us file your own taxes If zero or less, enter -0- 5. Tax planning us file your own taxes   6a. Tax planning us file your own taxes Enter the rental portion of excess casualty and theft losses (see instructions) 6a. Tax planning us file your own taxes       b. Tax planning us file your own taxes Enter the rental portion of depreciation of the dwelling unit b. Tax planning us file your own taxes       c. Tax planning us file your own taxes Carryover of excess casualty losses and depreciation from 2012 worksheet c. Tax planning us file your own taxes       d. Tax planning us file your own taxes Add lines 6a–6c d. Tax planning us file your own taxes       e. Tax planning us file your own taxes Allowable excess casualty and theft losses and depreciation. Tax planning us file your own taxes Enter the smaller of  line 5 or line 6d (see instructions) 6e. Tax planning us file your own taxes   PART III. Tax planning us file your own taxes Carryover of Unallowed Expenses to Next Year 7a. Tax planning us file your own taxes Operating expenses to be carried over to next year. Tax planning us file your own taxes Subtract line 4e from line 4d 7a. Tax planning us file your own taxes   b. Tax planning us file your own taxes Excess casualty and theft losses and depreciation to be carried over to next year. Tax planning us file your own taxes  Subtract line 6e from line 6d b. Tax planning us file your own taxes   Worksheet 9-1 Instructions. Tax planning us file your own taxes Worksheet for Figuring Rental Deductions for a Dwelling Unit Used as a Home Caution. Tax planning us file your own taxes Use the percentage determined in Part I, line F, to figure the rental portions to enter on lines 2a–2c, 4a–4b, and 6a–6b of  Part II. Tax planning us file your own taxes Line 2a. Tax planning us file your own taxes Figure the mortgage interest on the dwelling unit that you could deduct on Schedule A as if you had not rented the unit. Tax planning us file your own taxes Do not include interest on a loan that did not benefit the dwelling unit. Tax planning us file your own taxes For example, do not include interest on a home equity loan used to pay off credit cards or other personal loans, buy a car, or pay college tuition. Tax planning us file your own taxes Include interest on a loan used to buy, build, or improve the dwelling unit, or to refinance such a loan. Tax planning us file your own taxes Include the rental portion of this interest in the total you enter on line 2a of the worksheet. Tax planning us file your own taxes   Figure the qualified mortgage insurance premiums on the dwelling unit that you could deduct on line 13 of Schedule A as if you had not rented the unit. Tax planning us file your own taxes See the Schedule A instructions. Tax planning us file your own taxes However, figure your adjusted gross income (Form 1040, line 38) without your rental income and expenses from the dwelling unit. Tax planning us file your own taxes See Line 4b to deduct the part of the qualified mortgage insurance premiums not allowed because of the adjusted gross income limit. Tax planning us file your own taxes Include the rental portion of the amount from Schedule A, line 13, in the total you enter on line 2a of the worksheet. Tax planning us file your own taxes   Note. Tax planning us file your own taxes Do not file this Schedule A or use it to figure the amount to deduct on line 13 of that schedule. Tax planning us file your own taxes Instead, figure the personal portion on a separate Schedule A. Tax planning us file your own taxes If you have deducted mortgage interest or qualified mortgage insurance premiums on the dwelling unit on other forms, such as Schedule C or F, remember to reduce your Schedule A deduction by that amount. Tax planning us file your own taxes           Line 2c. Tax planning us file your own taxes Figure the casualty and theft losses related to the dwelling unit that you could deduct on Schedule A as if you had not rented the dwelling unit. Tax planning us file your own taxes To do this, complete Section A of Form 4684, Casualties and Thefts, treating the losses as personal losses. Tax planning us file your own taxes If any of the loss is due to a federally declared disaster, see the Instructions for Form 4684. Tax planning us file your own taxes On Form 4684, line 17, enter 10% of your adjusted gross income figured without your rental income and expenses from the dwelling unit. Tax planning us file your own taxes Enter the rental portion of the result from Form 4684, line 18, on line 2c of this worksheet. Tax planning us file your own taxes   Note. Tax planning us file your own taxes Do not file this Form 4684 or use it to figure your personal losses on Schedule A. Tax planning us file your own taxes Instead, figure the personal portion on a separate Form 4684. Tax planning us file your own taxes           Line 2d. Tax planning us file your own taxes Enter the total of your rental expenses that are directly related only to the rental activity. Tax planning us file your own taxes These include interest on loans used for rental activities other than to buy, build, or improve the dwelling unit. Tax planning us file your own taxes Also include rental agency fees, advertising, office supplies, and depreciation on office equipment used in your rental activity. Tax planning us file your own taxes           Line 2e. Tax planning us file your own taxes You can deduct the amounts on lines 2a, 2b, 2c, and 2d as rental expenses on Schedule E even if your rental expenses are more than your rental income. Tax planning us file your own taxes Enter the amounts on lines 2a, 2b, 2c, and 2d on the appropriate lines of Schedule E. Tax planning us file your own taxes           Line 4b. Tax planning us file your own taxes On line 2a, you entered the rental portion of the mortgage interest and qualified mortgage insurance premiums you could deduct on Schedule A if you had not rented the dwelling unit. Tax planning us file your own taxes If you had additional mortgage interest and qualified mortgage insurance premiums that would not be deductible on Schedule A because of limits imposed on them, enter on line 4b of this worksheet the rental portion of those excess amounts. Tax planning us file your own taxes Do not include interest on a loan that did not benefit the dwelling unit (as explained in the line 2a instructions). Tax planning us file your own taxes           Line 4e. Tax planning us file your own taxes You can deduct the amounts on lines 4a, 4b, and 4c as rental expenses on Schedule E only to the extent they are not more than the amount on line 4e. Tax planning us file your own taxes *           Line 6a. Tax planning us file your own taxes To find the rental portion of excess casualty and theft losses, use the Form 4684 you prepared for line 2c of this worksheet. Tax planning us file your own taxes   A. Tax planning us file your own taxes Enter the amount from Form 4684, line 10       B. Tax planning us file your own taxes Enter the rental portion of line A       C. Tax planning us file your own taxes Enter the amount from line 2c of this worksheet       D. Tax planning us file your own taxes Subtract line C from line B. Tax planning us file your own taxes Enter the result here and on line 6a of this worksheet               Line 6e. Tax planning us file your own taxes You can deduct the amounts on lines 6a, 6b, and 6c as rental expenses on Schedule E only to the extent they are not more than the amount on line 6e. Tax planning us file your own taxes * *Allocating the limited deduction. Tax planning us file your own taxes If you cannot deduct all of the amount on line 4d or 6d this year, you can allocate the allowable deduction in any way you wish among the expenses included on line 4d or 6d. Tax planning us file your own taxes Enter the amount you allocate to each expense on the appropriate line of Schedule E, Part I. Tax planning us file your own taxes Prev  Up  Next   Home   More Online Publications