Tips on Property Management Rental Income, Deductions and Record keeping.

How Do I Report Rental Income and Expenses?

If you rent buildings, rooms or apartments, and provide only heat and light, and trash collection, you normally report your rental income and expenses on Form 1040, Schedule E, Part I. 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 properties, complete and attach as many Schedules E as are needed to list the properties. Complete lines 1 and 2 for each property, including the street address 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.

Sum up your receipts and canceled checks for your repairs. All of these costs are deductible in the year they were incurred. Fill out Schedule E and Form 4562. List the total of your expenses for repairs on Schedule E, line 16. Carry over your depreciation deduction from Form 4562 and list it on line 20. Complete Schedule E and deduct the total of all of your rental expenses from your rental income.

If your rental expenses exceed rental income you may report a loss up to $25,000 on your tax return, limited for adjusted gross incomes above $100,000.

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