Publication 17
taxmap/pub17/p17-049.htm#en_us_publink1000171761If you rent buildings, rooms, or apartments, and provide only
heat and light, trash collection, etc., you normally report your rental income
and expenses on Schedule E, Part I. However, do not use that schedule to report
a not-for-profit activity. See
Not Rented for Profit, earlier.
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, Net Profit From Business (Sole Proprietorship).
Use Form 1065, U.S. Return of Partnership Income, if your rental activity is a
partnership (including a partnership with your spouse unless it is a qualified
joint venture). Substantial services do not include the furnishing of heat and
light, cleaning of public areas, trash collection, etc. For information, see
Publication 334, Tax Guide for Small Business. You also may have to pay
self-employment tax on your rental income using Schedule SE (Form 1040),
Self-Employment Tax.
taxmap/pub17/p17-049.htm#en_us_publink1000171764
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. 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. Attach a statement to your
return showing the name and address of the other person. In the left margin of
Schedule E, next to line 13, enter "See attached."
taxmap/pub17/p17-049.htm#en_us_publink1000171765Use Schedule E (Form 1040), Part I, to report your rental income
and expenses. List your total income, expenses, and depreciation for each rental
property. Be sure to answer the question on line 2.
If you have more than three rental or royalty properties, complete
and attach as many Schedules E as are needed to list the properties. Complete
lines 1 and 2 for each property. However, fill in the "Totals" column on only
one Schedule E. The figures in the "Totals" column on that Schedule E should be
the combined totals of all Schedules E.
Page 2 of Schedule E is used to report income or loss from partnerships,
S corporations, estates, trusts, and real estate mortgage investment conduits.
If you need to use Schedule E, page 2, use page 2 of the same Schedule E you
used to enter the combined totals in Part I. Also, include the amount from line
26 (Part I) in the "Total income or (loss)" on line 41 (Part V).
On Schedule E, page 1, line 20, enter the depreciation you are
claiming for each property. You must complete and attach Form 4562 for rental
activities only if you are claiming:
- Depreciation, including the special depreciation allowance,
on property placed in service during 2010,
- Depreciation on listed property (such as a car), regardless
of when it was placed in service, or
- Any other car expenses, including the standard mileage rate
or lease expenses.
Otherwise, figure your depreciation on your own worksheet. You
do not have to attach these computations to your return, but you should keep
them in your records for future reference.
 |
Worksheet 9-1. 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.
- Did you use the dwelling unit as a home this year? (See
Dwelling Unit Used as Home.)
- 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. Rental Use Percentage | | A. | Total days available for rent at fair rental price | A. | | | | | B. | Total days available for rent (line A) but not rented | B. | | | | | C. | Total days of rental use. Subtract line B from line A
| C. | | | | | D. | Total days of personal use (including days rented at less than fair rental price)
| D. | | | | | E. | Total days of rental and personal use.
Add lines C and D
| E. | | | | | F. | Percentage of expenses allowed for rental. Divide line C by line E
| | | F. | | | PART II. Allowable Rental Expenses | | 1. | Enter rents received | 1. | | | 2a. | Enter the rental portion of deductible home mortgage interest
and qualified
mortgage insurance premiums (see instructions)
| 2a. | | | | | b. | Enter the rental portion of real estate taxes | b. | | | | | c. | Enter the rental portion of deductible casualty and theft
losses (see instructions) | c. | | | | | d. | Enter direct rental expenses (see instructions) | d. | | | | | e. | Fully deductible rental expenses. Add lines 2a–2d. Enter here and
on the appropriate lines on Schedule E (see instructions)
| 2e. | | | 3. | Subtract line 2e from line 1. If zero or less, enter -0- | 3. | | | 4a. | Enter the rental portion of expenses directly related
to operating or maintaining
the dwelling unit (such as repairs, insurance, and utilities)
| 4a. | | | | | b. | Enter the rental portion of excess mortgage interest and
qualified mortgage insurance
premiums (see instructions)
| b. | | | | | c. | Carryover of operating expenses from 2009 worksheet | c. | | | | | d. | Add lines 4a–4c | d. | | | | | e. | Allowable expenses. Enter the
smaller of line 3 or line 4d (see instructions)
| 4e. | | | 5. | Subtract line 4e from line 3. If zero or less, enter -0- | 5. | | | 6a. | Enter the rental portion of excess casualty and theft
losses (see instructions) | 6a. | | | | | b. | Enter the depreciation for the rental portion of the dwelling
unit | b. | | | | | c. | Carryover of excess casualty losses and depreciation from
2009 worksheet | c. | | | | | d. | Add lines 6a–6c | d. | | | | | e. | Allowable excess casualty and theft losses and depreciation. Enter the
smaller of
line 5 or line 6d (see instructions)
| 6e. | | | PART III. Carryover of Unallowed Expenses to Next
Year | | 7a. | Operating expenses to be carried over to next year. Subtract line 4e from line 4d
| 7a. | | | b. | Excess casualty and theft losses and depreciation to
be carried over to next year.
Subtract line 6e from line 6d
| b. | |
|
taxmap/pub17/p17-049.htm#en_us_publink1000171769 |
Worksheet 9-1 Instructions. Worksheet for Figuring
Rental Deductions for a Dwelling Unit Used as a Home
Caution.
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.
| | Line 2a. | Figure the mortgage interest on the dwelling unit that
you could deduct on Schedule A (as if you were itemizing your deductions) if you
had not rented the unit. Do not include interest on a loan that did not benefit
the dwelling unit. 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. Include interest on a loan used to buy, build, or improve the dwelling
unit, or to refinance such a loan. Include the rental portion of this interest
in the total you enter on line 2a of the worksheet.
| | | Figure the qualified mortgage insurance premiums
on the dwelling unit that you could deduct on line 13 of Schedule A, if you had
not rented the unit. See the Schedule A instructions. However, figure your
adjusted gross income (Form 1040, line 38) without your rental income and
expenses from the dwelling unit. See
Line 4b
below to deduct the part of the qualified mortgage insurance premiums not
allowed because of the adjusted gross income limit. Include the rental portion
of the amount from Schedule A, line 13, in the total you enter on line 2a of the
worksheet.
| | | Note.
Do not file this Schedule A or use it to figure the amount to deduct on line 13
of that schedule. Instead, figure the personal portion on a separate Schedule A.
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.
| | | | | | | | Line 2c. | Figure the casualty and theft losses related to the dwelling
unit that you could deduct on Schedule A if you had not rented the dwelling
unit. To do this, complete Section A of Form 4684, Casualties and Thefts,
treating the losses as personal losses. If any of the loss is due to a disaster
which occurred before 2010 and which was declared a federal disaster after 2007,
see the Instructions for Form 4684. On Form 4684, line 19, enter 10% of your
adjusted gross income figured without your rental income and expenses from the
dwelling unit. Enter the rental portion of the result from Form 4684, line 21,
on line 2c of this worksheet.
| | | Note.
Do not file this Form 4684 or use it to figure your personal losses on Schedule
A. Instead, figure the personal portion on a separate Form 4684.
| | |
 At the time this publication went to print, Congress
was considering legislation that would extend the deduction for a net disaster
loss. To find out if this legislation was enacted, and for more details, see
Publication 527 or go to
www.irs.gov/formspubs.
| | | | | | | | Line 2d. | Enter the total of your rental expenses that are directly
related only to the rental activity. These include interest on loans used for
rental activities other than to buy, build, or improve the dwelling unit. Also
include rental agency fees, advertising, office supplies, and depreciation on
office equipment used in your rental activity.
| | | | | | | | Line 2e. | 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. Enter the amounts on lines 2a, 2b, 2c, and 2d on the appropriate
lines of Schedule E.
| | | | | | | | Line 4b. | 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. 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. Do not include interest on
a loan that did not benefit the dwelling unit (as explained in the line 2a
instructions).
| | | | | | | | Line 4e. | 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.*
| | | | | | | | Line 6a. | To find the rental portion of excess casualty and theft
losses, use the Form 4684 you prepared for line 2c of this worksheet. | | | A. | Enter the amount from Form 4684, line 10 | | | | | B. | Enter the rental portion of line A | | | | | C. | Enter the amount from line 2c of this worksheet | | | | | D. | Subtract line C from line B. Enter the result here and
on line 6a of this worksheet | | | | | | | | | | Line 6e. | 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.*
|
| *Allocating the limited deduction.
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. Enter the amount you allocate to each expense on the
appropriate line of Schedule E, Part I.
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