Schedule E for Landlords: Line-by-Line Guide
Schedule E is the IRS form where you report rental income and expenses, one column per property. Part I takes rents on line 3, expenses on lines 5 through 19, depreciation on line 18, and nets it all on lines 20 to 26, with the total flowing to Schedule 1 of your Form 1040. Here's every line in plain English. Clean rental property accounting through the year makes filling it in quick.
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Before line 1: the 1099 questions
Part I opens with two yes-or-no questions. A asks whether you made payments during the year that would require you to file Form 1099. B asks whether you did, or will, file them.
If your rental counts as a trade or business and you paid an individual contractor who isn’t incorporated, such as a handyman or plumber, more than the reporting threshold during the year, you may need to send them a 1099-NEC. The threshold was $600 for payments made through 2025. The One Big Beautiful Bill Act raised it to $2,000 for payments made in 2026, with inflation adjustments starting in 2027, so check the current instructions. Whether a small rental counts as a business for this purpose isn’t always clear. Answer honestly, and ask your tax preparer if you’re unsure.
Lines 1 and 2: the property
Line 1a: physical address. Street, city, state and ZIP for each property, in columns A, B and C. Need more than three? Attach more Schedule E pages and fill in only the totals on one of them.
Line 1b: type of property. Enter the code:
| Code | Type |
|---|---|
| 1 | Single family residence |
| 2 | Multi-family residence |
| 3 | Vacation or short-term rental |
| 4 | Commercial |
| 5 | Land |
| 6 | Royalties |
| 7 | Self-rental |
| 8 | Other (describe) |
A duplex you own outright is code 2, one column. A single-family home and a fourplex are two columns.
Line 2: fair rental days and personal use days. Count the days the property was rented at fair market rent, and the days you or family used it. A long-term rental you never stay in shows 365 fair rental days and 0 personal use days. The QJV box is for spouses who own a rental together and elect to be treated as a qualified joint venture instead of a partnership.
If personal use runs more than 14 days or 10% of the fair rental days, whichever is greater, the property is treated partly as a home and your deductions are limited. If you rented it for fewer than 15 days all year, you generally don’t report the rent at all. Short-term rentals with average stays of 7 days or less, or where you provide hotel-style services, may belong on a different form. Ask your tax preparer about any of these.
Lines 3 and 4: income
Line 3: rents received. Everything you received as rent during the year, before expenses:
- Monthly rent, including rent paid by Zelle, Venmo or cash.
- Advance rent, in the year you receive it, even if it covers next year.
- Late fees you collected.
- Any security deposit you kept for unpaid rent or damage.
- Expenses the tenant paid on your behalf, such as a repair bill they paid and deducted from rent. (Then deduct the expense on the right line.)
Don’t include deposits you plan to return. A 1099-K or 1099-MISC doesn’t change what’s taxable. Report what you actually received.
Line 4: royalties received. For oil, gas, mineral or similar royalties. Most landlords leave it blank.
Lines 5 to 19: expenses
Enter each expense for each property. Only the rental share counts if the property was partly personal.
| Line | What goes here |
|---|---|
| 5. Advertising | Listing fees, paid listing upgrades, signs |
| 6. Auto and travel | Mileage or actual car costs for rental trips, plus travel to a distant rental |
| 7. Cleaning and maintenance | Turnover cleaning, lawn care, pest control, snow removal, routine upkeep |
| 8. Commissions | Commissions paid to rental agents |
| 9. Insurance | Landlord policy, flood policy and similar coverage for the rental |
| 10. Legal and other professional fees | Tax preparation for the rental, attorney fees, eviction filing costs |
| 11. Management fees | What you pay a property manager |
| 12. Mortgage interest paid to banks, etc. | Interest from Form 1098 for loans on the rental |
| 13. Other interest | Interest on loans not reported on a 1098, like a private loan |
| 14. Repairs | Fixing things back to working order |
| 15. Supplies | Light bulbs, filters, small hardware |
| 16. Taxes | Property taxes on the rental |
| 17. Utilities | Utilities you pay, not ones the tenant pays |
| 18. Depreciation expense or depletion | See below |
| 19. Other (list) | Anything else, with a short description: HOA dues, software, bank fees, screening you paid for |
A few habits that keep this clean:
- Principal isn’t deductible. Only the interest goes on line 12.
- Improvements aren’t repairs. A new roof goes into depreciation, not line 14, unless a safe harbor applies.
- Be consistent. Pick one line for each recurring cost and stick with it.
- Keep line 19 specific. “Software” or “HOA dues” beats “miscellaneous”.
Line 18: depreciation
This is the depreciation on the building and on any improvements, for the year. Residential rental buildings use 27.5 years, straight line, and the first year uses the mid-month convention. Land isn’t depreciable.
Example: a $255,000 depreciable basis gives about $9,273 a year. If that property was placed in service in August, the first-year figure is about $3,477.
In the year you place a rental or an improvement in service, you also file Form 4562. After that, carry your depreciation schedule forward each year. Appliances, carpet and furniture usually have shorter lives than the building. Ask your tax preparer how to set those up.
Lines 20 to 22: each property’s result
Line 20: total expenses. Add lines 5 through 19.
Line 21: income or loss. Line 3 (and line 4) minus line 20. If it’s a loss, the instructions point you to Form 6198 in case at-risk rules apply, which is uncommon for a regular mortgaged rental.
Line 22: deductible rental real estate loss after limitation. If line 21 is a loss, the passive activity rules decide how much you can use this year, worked out on Form 8582. If you actively participate in managing the rental, up to $25,000 of losses can offset other income, but that allowance phases out between $100,000 and $150,000 of modified adjusted gross income. Disallowed losses carry forward. Different rules apply to real estate professionals and to married people filing separately. Ask your tax preparer.
Lines 23 to 26: totals for all properties
- Line 23a: total of line 3 for all rental properties.
- Line 23b: total of line 4 for all royalty properties.
- Line 23c: total of line 12 (mortgage interest) for all properties.
- Line 23d: total of line 18 (depreciation) for all properties.
- Line 23e: total of line 20 (expenses) for all properties.
- Line 24: income. Add the positive amounts from line 21. Don’t include losses.
- Line 25: losses. Add royalty losses from line 21 and rental real estate losses from line 22.
- Line 26: total rental real estate and royalty income or loss. Combine lines 24 and 25. If you have nothing else on Schedule E, this goes straight to Schedule 1 (Form 1040), line 5. If you also have partnership, S corporation or trust income in later parts, it goes into the total on page 2 instead.
Common Schedule E mistakes
- Deducting a whole improvement in one year.
- Forgetting depreciation, which the IRS still counts against you when you sell.
- Depreciating the land along with the building.
- Leaving out rent paid through payment apps, or deposits kept.
- Claiming utilities the tenant paid.
- Mixing personal and rental expenses on one card with no record of which is which.
Good bookkeeping makes this form a 20-minute job. Tools like Stessa produce a Schedule E report on the Manage plan, and Baselane includes one on its free Core plan. You’ll still want your tax preparer to review it.
Step by step
- 1
Gather your documents
Form 1098 for mortgage interest, any 1099-MISC or 1099-K, your property tax bill, insurance declarations, bank statements, receipts and last year's depreciation schedule. First year? Add the closing statement.
- 2
Fill in the property details on lines 1 and 2
Address, property type code, and the number of fair rental days and personal use days.
- 3
Enter rents and expenses on lines 3 through 19
One column per property. Put each expense on the line that matches it, and keep the same categories every year.
- 4
Work out depreciation for line 18
Use your depreciation schedule, and file Form 4562 for any property or improvement placed in service this year.
- 5
Total it up and apply any loss limits
Lines 20 and 21 give each property's result. If it's a loss, Form 8582 decides how much you can deduct on line 22. Lines 23 to 26 total all properties.
Questions landlords ask
The questions we get most, each answered in a paragraph.
Who has to file Schedule E?
Anyone who receives rental income from real estate they own directly, including through a single-member LLC treated as a disregarded entity. You also use Schedule E for royalties, and its later parts report income from partnerships, S corporations, estates and trusts. A multi-member LLC files its own partnership return and gives you a K-1, which goes in Part II instead.
Can I file Schedule E if my rental lost money?
Yes, and you should, even if you can't use the loss this year. Report the loss on line 21, then work through Form 8582 to see how much passive loss you can deduct. Anything disallowed carries forward to future years and is generally released when you sell the property in a taxable sale.
Where does depreciation go on Schedule E?
Line 18, for each property. In the year you place a rental or an improvement in service, you also file Form 4562 to show how you calculated it. In later years, you usually only need your own depreciation schedule unless you placed new property in service. Residential buildings use 27.5 years with the mid-month convention.
Do I report a security deposit on Schedule E?
Not when you collect it, if you plan to return it. It becomes rental income on line 3 in the year you keep any of it, for example to cover unpaid rent or damage. A deposit that's really last month's rent is advance rent, which is income in the year you receive it.
What are fair rental days and personal use days on line 2?
Fair rental days are days the property was rented at a fair price. Personal use days include days you, family members or anyone paying below fair rent used it. If personal use is more than 14 days or 10% of the fair rental days, whichever is greater, your expense deductions are limited. Ask your tax preparer if that applies.