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Amend Tax Form

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Amend Tax Form

Amend tax form Publication 584 - Additional Material Table of Contents This image is too large to be displayed in the current screen. Amend tax form Please click the link to view the image. Amend tax form Entrance Hall This image is too large to be displayed in the current screen. Amend tax form Please click the link to view the image. Amend tax form Living Room This image is too large to be displayed in the current screen. Amend tax form Please click the link to view the image. Amend tax form Dining Room This image is too large to be displayed in the current screen. Amend tax form Please click the link to view the image. Amend tax form Kitchen This image is too large to be displayed in the current screen. Amend tax form Please click the link to view the image. Amend tax form Den This image is too large to be displayed in the current screen. Amend tax form Please click the link to view the image. Amend tax form Bedrooms This image is too large to be displayed in the current screen. Amend tax form Please click the link to view the image. Amend tax form Bathrooms This image is too large to be displayed in the current screen. Amend tax form Please click the link to view the image. Amend tax form Recreation Room This image is too large to be displayed in the current screen. Amend tax form Please click the link to view the image. Amend tax form Laundry and Basement This image is too large to be displayed in the current screen. Amend tax form Please click the link to view the image. Amend tax form Garage This image is too large to be displayed in the current screen. Amend tax form Please click the link to view the image. Amend tax form Sporting Equipment This image is too large to be displayed in the current screen. Amend tax form Please click the link to view the image. Amend tax form Men's Clothing This image is too large to be displayed in the current screen. Amend tax form Please click the link to view the image. Amend tax form Women's Clothing This image is too large to be displayed in the current screen. Amend tax form Please click the link to view the image. Amend tax form Children's Clothing This image is too large to be displayed in the current screen. Amend tax form Please click the link to view the image. Amend tax form Jewelry This image is too large to be displayed in the current screen. Amend tax form Please click the link to view the image. Amend tax form Electrical Appliances This image is too large to be displayed in the current screen. Amend tax form Please click the link to view the image. Amend tax form Linens This image is too large to be displayed in the current screen. Amend tax form Please click the link to view the image. Amend tax form Miscellaneous This image is too large to be displayed in the current screen. Amend tax form Please click the link to view the image. Amend tax form Motor Vehicles Schedule 20. Amend tax form Home (Excluding Contents) Note. Amend tax form If you used the entire property as your home, fill out only column (a). Amend tax form If you used part of the property as your home and part of it for business or to produce rental income, you must allocate the entries on lines 2-9 between the personal part (column (a)) and the business/rental part (column (b)). Amend tax form 1. Amend tax form Description of property (Show location and date acquired. Amend tax form )     (a)  Personal Part (b)  Business/Rental Part 2. Amend tax form Cost or other (adjusted) basis of property (from Worksheet A)     3. Amend tax form Insurance or other reimbursement Note. Amend tax form If line 2 is more than line 3, skip line 4. Amend tax form If line 3 is more than line 2, you exclude gain, and the gain is more than you can exclude, see the instructions for line 3 in the Instructions for Form 4684 for the amount to enter. Amend tax form     4. Amend tax form Gain from casualty. Amend tax form If line 3 is more than line 2, enter the difference here and skip lines 5 through 9. Amend tax form But see Next below line 9. Amend tax form     5. Amend tax form Fair market value before casualty     6. Amend tax form Fair market value after casualty     7. Amend tax form Decrease in fair market value. Amend tax form Subtract line 6 from line 5. Amend tax form     8. Amend tax form Enter the smaller of line 2 or line 7 Note for business/rental part. Amend tax form If the property was totally destroyed by casualty, enter on line 8, column (b) the amount from line 2, column (b). Amend tax form     9. Amend tax form Subtract line 3 from line 8. Amend tax form If zero or less, enter -0-. Amend tax form     Next: Transfer the entries from line 1 and lines 2-9, column (a), above to the corresponding lines on Form 4684, Section A. Amend tax form Transfer the entries from line 1 and lines 2-9, column (b), to the corresponding lines on Form 4684, Section B. Amend tax form Worksheet A. Amend tax form Cost or Other (Adjusted) Basis Caution. Amend tax form See the Worksheet A Instructions before you use this worksheet. Amend tax form         (a) Personal Part (b) Business/Rental Part 1. Amend tax form   Enter the purchase price of the home damaged or destroyed. Amend tax form (If you filed Form 2119 when you originally acquired that home to postpone gain on the sale of a previous home before May 7, 1997, enter the adjusted basis of the new home from that Form 2119. Amend tax form ) 1. Amend tax form     2. Amend tax form   Seller paid points for home bought after 1990. Amend tax form Do not include any seller-paid points you already subtracted to arrive at the amount entered on line 1 2. Amend tax form     3. Amend tax form   Subtract line 2 from line 1 3. Amend tax form     4. Amend tax form   Settlement fees or closing costs. Amend tax form (See Settlement costs in Publication 551. Amend tax form ) If line 1 includes the adjusted basis of the new home from Form 2119, skip lines 4a-4g and 5; go to line 6. Amend tax form         a. Amend tax form Abstract and recording fees 4a. Amend tax form       b. Amend tax form Legal fees (including fees for title search and preparing documents) 4b. Amend tax form       c. Amend tax form Survey fees 4c. Amend tax form       d. Amend tax form Title insurance 4d. Amend tax form       e. Amend tax form Transfer or stamp taxes 4e. Amend tax form       f. Amend tax form Amounts that the seller owed that you agreed to pay (back taxes or interest, recording or mortgage fees, and sales commissions) 4f. Amend tax form       g. Amend tax form Other 4g. Amend tax form     5. Amend tax form   Add lines 4a through 4g 5. Amend tax form     6. Amend tax form   Cost of additions and improvements. Amend tax form (See Increases to Basis in Publication 551. Amend tax form ) Do not include any additions and improvements included on line 1 6. Amend tax form     7. Amend tax form   Special tax assessments paid for local improvements, such as streets and sidewalks 7. Amend tax form     8. Amend tax form   Other increases to basis 8. Amend tax form     9. Amend tax form   Add lines 3, 5, 6, 7, and 8 9. Amend tax form     10. Amend tax form   Depreciation allowed or allowable, related to the business use or rental of the home 10. Amend tax form 0   11. Amend tax form   Other decreases to basis (See Decreases to Basis in Publication 551. Amend tax form ) 11. Amend tax form     12. Amend tax form   Add lines 10 and 11 12. Amend tax form     13. Amend tax form   Cost or other (adjusted) basis of home damaged or destroyed. Amend tax form Subtract line 12 from line 9. Amend tax form Enter here and on Schedule 20, line 2 13. Amend tax form     Worksheet A Instructions. Amend tax form If you use Worksheet A to figure the cost or other (adjusted) basis of your home, follow these instructions. Amend tax form DO NOT use this worksheet to determine your basis if you acquired an interest in your home from a decedent who died in 2010 and whose executor filed Form 8939. Amend tax form IF. Amend tax form . Amend tax form . Amend tax form   THEN. Amend tax form . Amend tax form . Amend tax form you inherited your home from a decedent who died either before or after 2010 or from a decedent who died in 2010 and whose executor did not file Form 8939. Amend tax form 1 skip lines 1–4 of the worksheet. Amend tax form 2 find your basis using the rules under Inherited Property in Publication 551. Amend tax form Enter this amount on line 5 of the worksheet. Amend tax form 3 fill out lines 6–13 of the worksheet. Amend tax form you received your home as a gift 1 read Property Received as a Gift in Publication 551 and enter on lines 1 and 3 of the worksheet either the donor's adjusted basis or the home's fair market value at the time of the gift, whichever is appropriate. Amend tax form 2 if you can add any federal gift tax to your basis, enter that amount on line 5 of the worksheet. Amend tax form 3 fill out the rest of the worksheet. Amend tax form you received your home as a trade for other property 1 enter on line 1 of the worksheet the fair market value of the other property at the time of the trade. Amend tax form (But if you received your home as a trade for your previous home before May 7, 1997, and had a gain on the trade that you postponed using Form 2119, enter on line 1 of the worksheet the adjusted basis of the new home from that Form 2119. Amend tax form ) 2 fill out the rest of the worksheet. Amend tax form you built your home 1 add the purchase price of the land and the cost of building the home. Amend tax form Enter that total on line 1 of the worksheet. Amend tax form (However, if you filed a Form 2119 to postpone gain on the sale of a previous home before May 7, 1997, enter on line 1 of the worksheet the adjusted basis of the new home from that Form 2119. Amend tax form ) 2 fill out the rest of the worksheet. Amend tax form you received your home from your spouse after July 18, 1984 1 skip lines 1–4 of the worksheet. Amend tax form 2 enter on line 5 of the worksheet your spouse's cost or other (adjusted) basis in the home just before you received it. Amend tax form 3 fill out lines 6–13 of the worksheet, making adjustments to basis only for events after the transfer. Amend tax form you owned a home jointly with your spouse, who transferred his or her interest in the home to you after July 18, 1984     fill out one worksheet, making adjustments to basis for events both before and after the transfer. Amend tax form   you received your home from your spouse before July 19, 1984 1 skip lines 1–4 of the worksheet. Amend tax form 2 enter on line 5 of the worksheet the home's fair market value at the time you received it. Amend tax form 3 fill out lines 6–13 of the worksheet, making adjustments to basis only for events after the transfer. Amend tax form you owned a home jointly with your spouse, and your spouse transferred his or her interest in the home to you before July 19, 1984 1 fill out a worksheet, lines 1–13, making adjustments to basis only for events before the transfer. Amend tax form 2 multiply the amount on line 13 of that worksheet by 50% (0. Amend tax form 50) to get the adjusted basis of your half-interest at the time of the transfer. Amend tax form 3 multiply the fair market value of the home at the time of the transfer by 50% (0. Amend tax form 50). Amend tax form Generally, this is the basis of the half-interest that your spouse owned. Amend tax form 4 add the amounts from steps 2 and 3 and enter the total on line 5 of a second worksheet. Amend tax form 5 complete lines 6–13 of the second worksheet, making adjustments to basis only for events after the transfer. Amend tax form you owned your home jointly with a nonspouse 1 fill out lines 1–13 of the worksheet. Amend tax form 2 multiply the amount on line 13 by your percentage of ownership to get the adjusted basis of your part-interest. Amend tax form Worksheet A Instructions. Amend tax form (Continued) IF. Amend tax form . Amend tax form . Amend tax form   THEN. Amend tax form . Amend tax form . Amend tax form you owned your home jointly with your spouse who died before 2010 and before the casualty 1 fill out a worksheet, lines 1–13, including adjustments to basis only for events before your spouse's death. Amend tax form 2 multiply the amount on line 13 of that worksheet by 50% (0. Amend tax form 50) to get the adjusted basis of your half-interest on the date of death. Amend tax form 3 figure the basis for the half-interest owned by your spouse. Amend tax form This is one-half of the fair market value on the date of death (or later alternate valuation used for estate or inheritance tax). Amend tax form (The basis in your half will remain one-half of the adjusted basis determined in step 2. Amend tax form ) 4 add the amounts from steps 2 and 3 and enter the total on line 5 of a second worksheet. Amend tax form 5 complete lines 6–13 of the second worksheet, making adjustments to basis only for events after your spouse's death. Amend tax form you owned your home jointly with your spouse who died before 2010 and before the casualty, and your permanent legal home is in a community property state 1 skip lines 1–4 of the worksheet. Amend tax form 2 enter the amount of your basis on line 5 of the worksheet. Amend tax form Generally, this is the fair market value of the home at the time of death. Amend tax form (But see Community Property in Publication 551 for special rules. Amend tax form ) 3 fill out lines 6–13 of the worksheet, making adjustments to basis only for events after your spouse's death. Amend tax form you owned your home jointly with a nonspouse who died before 2010 and before the casualty 1 fill out lines 1–13 of the worksheet, including adjustments to basis only for events before the co-owner's death. Amend tax form 2 multiply the amount on line 13 by your percentage of ownership to get the adjusted basis of your part-interest on the date of death. Amend tax form 3 multiply the fair market value on the date of death (or later alternate valuation used for estate or inheritance tax) by the co-owner's percentage of ownership. Amend tax form This is the basis for the co-owner's part-interest. Amend tax form 4 add the amounts from steps 2 and 3 and enter the total on line 5 of a second worksheet. Amend tax form 5 complete lines 6–13 of the second worksheet, including adjustments to basis only for events after the co-owner's death. Amend tax form your home was ever damaged as a result of a prior casualty 1 on line 8 of the worksheet, enter any amounts you spent to restore the home to its condition before the prior casualty. Amend tax form 2 on line 11 enter: any insurance reimbursements you received (or expect to receive) for the prior loss,  and any deductible casualty losses from prior years not covered by insurance. Amend tax form the person who sold you your home paid points on your loan and you bought your home after 1990 but before April 4, 1994. Amend tax form   on line 2 enter the seller-paid points only if you deducted them as home mortgage interest in the year paid (unless you used the seller-paid points to reduce the amount on line 1). Amend tax form the person who sold you your home paid points on your loan and you bought your home after April 3, 1994   on line 2 enter the seller-paid points even if you did not deduct them (unless you used the seller-paid points to reduce the amount on line 1). Amend tax form you used part of the property as your home and part of it for business or to produce rental income   you must allocate the entries on Worksheet A between the personal part (column (a)) and the business/rental part (column (b)). Amend tax form none of these items apply   fill out the entire worksheet. Amend tax form Prev  Up  Next   Home   More Online Publications
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The Amend Tax Form

Amend tax form 9. Amend tax form   Rental Income and Expenses Table of Contents Introduction Useful Items - You may want to see: Rental Income Rental ExpensesVacant while listed for sale. Amend tax form 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. Amend tax form Dividing Expenses Dwelling Unit Used as a Home Reporting Income and Deductions DepreciationChanging your accounting method to deduct unclaimed depreciation. Amend tax form 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. Amend tax form It also covers the following topics. Amend tax form Personal use of dwelling unit (including vacation home). Amend tax form Depreciation. Amend tax form Limits on rental losses. Amend tax form How to report your rental income and expenses. Amend tax form If you sell or otherwise dispose of your rental property, see Publication 544, Sales and Other Dispositions of Assets. Amend tax form If you have a loss from damage to, or theft of, rental property, see Publication 547, Casualties, Disasters, and Thefts. Amend tax form 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. Amend tax form See Publication 527, Residential Rental Property, for more information. Amend tax form 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. Amend tax form Rental income is any payment you receive for the use or occupation of property. Amend tax form In addition to amounts you receive as normal rent payments, there are other amounts that may be rental income. Amend tax form When to report. Amend tax form   If you are a cash-basis taxpayer, you report rental income on your return for the year you actually or constructively receive it. Amend tax form You are a cash-basis taxpayer if you report income in the year you receive it, regardless of when it was earned. Amend tax form You constructively receive income when it is made available to you, for example, by being credited to your bank account. Amend tax form   For more information about when you constructively receive income, see Accounting Methods in chapter 1. Amend tax form Advance rent. Amend tax form   Advance rent is any amount you receive before the period that it covers. Amend tax form 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. Amend tax form Example. Amend tax form You sign a 10-year lease to rent your property. Amend tax form 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. Amend tax form You must include $10,000 in your income in the first year. Amend tax form Canceling a lease. Amend tax form   If your tenant pays you to cancel a lease, the amount you receive is rent. Amend tax form Include the payment in your income in the year you receive it regardless of your method of accounting. Amend tax form Expenses paid by tenant. Amend tax form   If your tenant pays any of your expenses, the payments are rental income. Amend tax form Because you must include this amount in income, you can deduct the expenses if they are deductible rental expenses. Amend tax form See Rental Expenses , later, for more information. Amend tax form Property or services. Amend tax form   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. Amend tax form   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. Amend tax form Security deposits. Amend tax form   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. Amend tax form 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. Amend tax form   If an amount called a security deposit is to be used as a final payment of rent, it is advance rent. Amend tax form Include it in your income when you receive it. Amend tax form Part interest. Amend tax form   If you own a part interest in rental property, you must report your part of the rental income from the property. Amend tax form Rental of property also used as your home. Amend tax form   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. Amend tax form However, you can deduct on Schedule A (Form 1040) the interest, taxes, and casualty and theft losses that are allowed for nonrental property. Amend tax form See Personal Use of Dwelling Unit (Including Vacation Home) , later. Amend tax form Rental Expenses This part discusses expenses of renting property that you ordinarily can deduct from your rental income. Amend tax form 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. Amend tax form Depreciation , which you can also deduct from your rental income, is discussed later. Amend tax form Personal use of rental property. Amend tax form   If you sometimes use your rental property for personal purposes, you must divide your expenses between rental and personal use. Amend tax form Also, your rental expense deductions may be limited. Amend tax form See Personal Use of Dwelling Unit (Including Vacation Home) , later. Amend tax form Part interest. Amend tax form   If you own a part interest in rental property, you can deduct expenses that you paid according to your percentage of ownership. Amend tax form When to deduct. Amend tax form   If you are a cash-basis taxpayer, you generally deduct your rental expenses in the year you pay them. Amend tax form Depreciation. Amend tax form   You can begin to depreciate rental property when it is ready and available for rent. Amend tax form See Placed-in-Service under When Does Depreciation Begin and End in chapter 2 of Publication 527. Amend tax form Pre-rental expenses. Amend tax form   You can deduct your ordinary and necessary expenses for managing, conserving, or maintaining rental property from the time you make it available for rent. Amend tax form Uncollected rent. Amend tax form   If you are a cash-basis taxpayer, do not deduct uncollected rent. Amend tax form Because you have not included it in your income, it is not deductible. Amend tax form Vacant rental property. Amend tax form   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. Amend tax form However, you cannot deduct any loss of rental income for the period the property is vacant. Amend tax form Vacant while listed for sale. Amend tax form   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. Amend tax form If the property is not held out and available for rent while listed for sale, the expenses are not deductible rental expenses. Amend tax form 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. Amend tax form Improvements. Amend tax form   You must capitalize any expense you pay to improve your rental property. Amend tax form 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. Amend tax form Betterments. Amend tax form   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. Amend tax form Restoration. Amend tax form   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. Amend tax form Adaptation. Amend tax form   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. Amend tax form Separate the costs of repairs and improvements, and keep accurate records. Amend tax form You will need to know the cost of improvements when you sell or depreciate your property. Amend tax form The expenses you capitalize for improving your property can generally be depreciated as if the improvement were separate property. Amend tax form 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. Amend tax form Insurance premiums paid in advance. Amend tax form   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. Amend tax form You cannot deduct the total premium in the year you pay it. Amend tax form Legal and other professional fees. Amend tax form   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. Amend tax form For example, on your 2013 Schedule E, you can deduct fees paid in 2013 to prepare your 2012 Schedule E, Part I. Amend tax form 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. Amend tax form Local benefit taxes. Amend tax form   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. Amend tax form These charges are nondepreciable capital expenditures, and must be added to the basis of your property. Amend tax form However, you can deduct local benefit taxes that are for maintaining, repairing, or paying interest charges for the benefits. Amend tax form Local transportation expenses. Amend tax form    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. Amend tax form 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. Amend tax form See Publication 587, Business Use of Your Home, for information on determining if your home office qualifies as a principal place of business. Amend tax form   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. Amend tax form For 2013, the standard mileage rate for business use is 56. Amend tax form 5 cents per mile. Amend tax form For more information, see chapter 26. Amend tax form    To deduct car expenses under either method, you must keep records that follow the rules in chapter 26. Amend tax form In addition, you must complete Form 4562, Part V, and attach it to your tax return. Amend tax form Rental of equipment. Amend tax form   You can deduct the rent you pay for equipment that you use for rental purposes. Amend tax form However, in some cases, lease contracts are actually purchase contracts. Amend tax form If so, you cannot deduct these payments. Amend tax form You can recover the cost of purchased equipment through depreciation. Amend tax form Rental of property. Amend tax form   You can deduct the rent you pay for property that you use for rental purposes. Amend tax form 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. Amend tax form Travel expenses. Amend tax form   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. Amend tax form You must properly allocate your expenses between rental and nonrental activities. Amend tax form You cannot deduct the cost of traveling away from home if the primary purpose of the trip was to improve your property. Amend tax form You recover the cost of improvements by taking depreciation. Amend tax form For information on travel expenses, see chapter 26. Amend tax form    To deduct travel expenses, you must keep records that follow the rules in chapter 26. Amend tax form   See Rental Expenses in Publication 527 for more information. Amend tax form 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. Amend tax form 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. Amend tax form You cannot deduct depreciation or insurance for the part of the year the property was held for personal use. Amend tax form 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). Amend tax form Example. Amend tax form Your tax year is the calendar year. Amend tax form You moved from your home in May and started renting it out on June 1. Amend tax form You can deduct as rental expenses seven-twelfths of your yearly expenses, such as taxes and insurance. Amend tax form Starting with June, you can deduct as rental expenses the amounts you pay for items generally billed monthly, such as utilities. Amend tax form 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. Amend tax form 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). Amend tax form 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. Amend tax form There is no change in the types of expenses deductible for the personal-use part of your property. Amend tax form Generally, these expenses may be deducted only if you itemize your deductions on Schedule A (Form 1040). Amend tax form You cannot deduct any part of the cost of the first phone line even if your tenants have unlimited use of it. Amend tax form You do not have to divide the expenses that belong only to the rental part of your property. Amend tax form 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. Amend tax form 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. Amend tax form 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. Amend tax form How to divide expenses. Amend tax form   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. Amend tax form You can use any reasonable method for dividing the expense. Amend tax form It may be reasonable to divide the cost of some items (for example, water) based on the number of people using them. Amend tax form 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. Amend tax form 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. Amend tax form 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. Amend tax form 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. Amend tax form Where to report. Amend tax form   Report your not-for-profit rental income on Form 1040, line 21. Amend tax form 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. Amend tax form   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. Amend tax form You can deduct these expenses only if they, together with certain other miscellaneous itemized deductions, total more than 2% of your adjusted gross income. Amend tax form 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. Amend tax form 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. Amend tax form Only your rental expenses may be deducted on Schedule E (Form 1040). Amend tax form Some of your personal expenses may be deductible if you itemize your deductions on Schedule A (Form 1040). Amend tax form You must also determine if the dwelling unit is considered a home. Amend tax form The amount of rental expenses that you can deduct may be limited if the dwelling unit is considered a home. Amend tax form Whether a dwelling unit is considered a home depends on how many days during the year are considered to be days of personal use. Amend tax form 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. Amend tax form Dwelling unit. Amend tax form   A dwelling unit includes a house, apartment, condominium, mobile home, boat, vacation home, or similar property. Amend tax form It also includes all structures or other property belonging to the dwelling unit. Amend tax form A dwelling unit has basic living accommodations, such as sleeping space, a toilet, and cooking facilities. Amend tax form   A dwelling unit does not include property used solely as a hotel, motel, inn, or similar establishment. Amend tax form 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. Amend tax form Example. Amend tax form   You rent a room in your home that is always available for short-term occupancy by paying customers. Amend tax form You do not use the room yourself, and you allow only paying customers to use the room. Amend tax form The room is used solely as a hotel, motel, inn, or similar establishment and is not a dwelling unit. Amend tax form 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. Amend tax form When dividing your expenses, follow these rules. Amend tax form 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. Amend tax form This rule does not apply when determining whether you used the unit as a home. Amend tax form Any day that the unit is available for rent but not actually rented is not a day of rental use. Amend tax form Example. Amend tax form Your beach cottage was available for rent from June 1 through August 31 (92 days). Amend tax form 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. Amend tax form 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. Amend tax form Your family also used the cottage during the last 2 weeks of May (14 days). Amend tax form The cottage was not used at all before May 17 or after August 31. Amend tax form You figure the part of the cottage expenses to treat as rental expenses as follows. Amend tax form The cottage was used for rental a total of 85 days (92 − 7). Amend tax form The days it was available for rent but not rented (7 days) are not days of rental use. Amend tax form The July weekend (2 days) you used it is rental use because you received a fair rental price for the weekend. Amend tax form You used the cottage for personal purposes for 14 days (the last 2 weeks in May). Amend tax form The total use of the cottage was 99 days (14 days personal use + 85 days rental use). Amend tax form Your rental expenses are 85/99 (86%) of the cottage expenses. Amend tax form Note. Amend tax form 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. Amend tax form Therefore, you had 16 days of personal use and 83 days of rental use for this purpose. Amend tax form 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. Amend tax form If you have a net loss, you may not be able to deduct all of the rental expenses. Amend tax form See Dwelling Unit Used as a Home, next. Amend tax form 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. Amend tax form 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. Amend tax form See What is a day of personal use , later. Amend tax form Fair rental price. Amend tax form   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. Amend tax form 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. Amend tax form   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. Amend tax form Instead, count it as a day of personal use in applying both (1) and (2) above. Amend tax form 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. Amend tax form 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). Amend tax form However, see Days used as a main home before or after renting , later. Amend tax form 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. Amend tax form Family includes only your spouse, brothers and sisters, half-brothers and half-sisters, ancestors (parents, grandparents, etc. Amend tax form ), and lineal descendants (children, grandchildren, etc. Amend tax form ). Amend tax form Anyone under an arrangement that lets you use some other dwelling unit. Amend tax form Anyone at less than a fair rental price. Amend tax form Main home. Amend tax form   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. Amend tax form Shared equity financing agreement. Amend tax form   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. Amend tax form Donation of use of property. Amend tax form   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. Amend tax form Examples. Amend tax form   The following examples show how to determine days of personal use. Amend tax form Example 1. Amend tax form You and your neighbor are co-owners of a condominium at the beach. Amend tax form Last year, you rented the unit to vacationers whenever possible. Amend tax form The unit was not used as a main home by anyone. Amend tax form Your neighbor used the unit for 2 weeks last year; you did not use it at all. Amend tax form 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. Amend tax form Example 2. Amend tax form You and your neighbors are co-owners of a house under a shared equity financing agreement. Amend tax form Your neighbors live in the house and pay you a fair rental price. Amend tax form 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. Amend tax form This is because your neighbors rent the house as their main home under a shared equity financing agreement. Amend tax form Example 3. Amend tax form You own a rental property that you rent to your son. Amend tax form Your son does not own any interest in this property. Amend tax form He uses it as his main home and pays you a fair rental price. Amend tax form 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. Amend tax form Example 4. Amend tax form You rent your beach house to Joshua. Amend tax form Joshua rents his cabin in the mountains to you. Amend tax form You each pay a fair rental price. Amend tax form 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. Amend tax form Days used for repairs and maintenance. Amend tax form   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. Amend tax form 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. Amend tax form Days used as a main home before or after renting. Amend tax form   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. Amend tax form Do not count them as days of personal use if: You rented or tried to rent the property for 12 or more consecutive months. Amend tax form 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. Amend tax form However, this special rule does not apply when dividing expenses between rental and personal use. Amend tax form Examples. Amend tax form   The following examples show how to determine whether you used your rental property as a home. Amend tax form Example 1. Amend tax form You converted the basement of your home into an apartment with a bedroom, a bathroom, and a small kitchen. Amend tax form You rented the basement apartment at a fair rental price to college students during the regular school year. Amend tax form You rented to them on a 9-month lease (273 days). Amend tax form You figured 10% of the total days rented to others at a fair rental price is 27 days. Amend tax form During June (30 days), your brothers stayed with you and lived in the basement apartment rent free. Amend tax form Your basement apartment was used as a home because you used it for personal purposes for 30 days. Amend tax form Rent-free use by your brothers is considered personal use. Amend tax form Your personal use (30 days) is more than the greater of 14 days or 10% of the total days it was rented (27 days). Amend tax form Example 2. Amend tax form 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). Amend tax form Your sister-in-law stayed in the room, rent free, for the last 3 weeks (21 days) in July. Amend tax form You figured 10% of the total days rented to others at a fair rental price is 3 days. Amend tax form The room was used as a home because you used it for personal purposes for 21 days. Amend tax form That is more than the greater of 14 days or 10% of the 27 days it was rented (3 days). Amend tax form Example 3. Amend tax form You own a condominium apartment in a resort area. Amend tax form You rented it at a fair rental price for a total of 170 days during the year. Amend tax form 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. Amend tax form Your family actually used the apartment for 10 of those days. Amend tax form Therefore, the apartment is treated as having been rented for 160 (170 − 10) days. Amend tax form You figured 10% of the total days rented to others at a fair rental price is 16 days. Amend tax form Your family also used the apartment for 7 other days during the year. Amend tax form You used the apartment as a home because you used it for personal purposes for 17 days. Amend tax form That is more than the greater of 14 days or 10% of the 160 days it was rented (16 days). Amend tax form Minimal rental use. Amend tax form   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. Amend tax form See Used as a home but rented less than 15 days , later, for more information. Amend tax form Limit on deductions. Amend tax form   Renting a dwelling unit that is considered a home is not a passive activity. Amend tax form 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. Amend tax form 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. Amend tax form Any expenses carried forward to the next year will be subject to any limits that apply for that year. Amend tax form 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. Amend tax form   To figure your deductible rental expenses for this year and any carryover to next year, use Worksheet 9-1. Amend tax form Reporting Income and Deductions Property not used for personal purposes. Amend tax form   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. Amend tax form Property used for personal purposes. Amend tax form   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. Amend tax form Not used as a home. Amend tax form   If you use a dwelling unit for personal purposes, but not as a home, report all the rental income in your income. Amend tax form 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 . Amend tax form The expenses for personal use are not deductible as rental expenses. Amend tax form   Your deductible rental expenses can be more than your gross rental income; however, see Limits on Rental Losses , later. Amend tax form Used as a home but rented less than 15 days. Amend tax form   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). Amend tax form You are not required to report the rental income and rental expenses from this activity. Amend tax form The expenses, including qualified mortgage interest, property taxes, and any qualified casualty loss will be reported as normally allowed on Schedule A (Form 1040). Amend tax form See the Instructions for Schedule A (Form 1040) for more information on deducting these expenses. Amend tax form Used as a home and rented 15 days or more. Amend tax form   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. Amend tax form 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 . Amend tax form The expenses for personal use are not deductible as rental expenses. Amend tax form   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. Amend tax form You do not need to use Worksheet 9-1. Amend tax form   However, if you had a net loss from renting the dwelling unit for the year, your deduction for certain rental expenses is limited. Amend tax form To figure your deductible rental expenses and any carryover to next year, use Worksheet 9-1. Amend tax form Depreciation You recover the cost of income-producing property through yearly tax deductions. Amend tax form You do this by depreciating the property; that is, by deducting some of the cost each year on your tax return. Amend tax form 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. Amend tax form You cannot simply deduct your mortgage or principal payments, or the cost of furniture, fixtures, and equipment, as an expense. Amend tax form You can deduct depreciation only on the part of your property used for rental purposes. Amend tax form Depreciation reduces your basis for figuring gain or loss on a later sale or exchange. Amend tax form You may have to use Form 4562 to figure and report your depreciation. Amend tax form See How To Report Rental Income and Expenses , later. Amend tax form Alternative minimum tax (AMT). Amend tax form    If you use accelerated depreciation, you may be subject to the AMT. Amend tax form 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). Amend tax form Claiming the correct amount of depreciation. Amend tax form   You should claim the correct amount of depreciation each tax year. Amend tax form 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. Amend tax form   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. Amend tax form S Individual Income Tax Return. Amend tax form 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. Amend tax form See Claiming the correct amount of depreciation in chapter 2 of Publication 527 for more information. Amend tax form Changing your accounting method to deduct unclaimed depreciation. Amend tax form   To change your accounting method, you generally must file Form 3115, Application for Change in Accounting Method, to get the consent of the IRS. Amend tax form In some instances, that consent is automatic. Amend tax form For more information, see chapter 1 of Publication 946. Amend tax form Land. Amend tax form   You cannot depreciate the cost of land because land generally does not wear out, become obsolete, or get used up. Amend tax form The costs of clearing, grading, planting, and landscaping are usually all part of the cost of land and cannot be depreciated. Amend tax form More information. Amend tax form   See Publication 527 for more information about depreciating rental property and see Publication 946 for more information about depreciation. Amend tax form 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. Amend tax form You must consider these rules in the order shown below. Amend tax form At-risk rules. Amend tax form These rules are applied first if there is investment in your rental real estate activity for which you are not at risk. Amend tax form This applies only if the real property was placed in service after 1986. Amend tax form Passive activity limits. Amend tax form 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. Amend tax form However, there are exceptions. Amend tax form 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. Amend tax form Losses from holding real property (other than mineral property) placed in service before 1987 are not subject to the at-risk rules. Amend tax form 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. Amend tax form 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. Amend tax form See Publication 925 for more information. Amend tax form Passive Activity Limits In most cases, all rental real estate activities (except those of certain real estate professionals, discussed later) are passive activities. Amend tax form 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. Amend tax form Limits on passive activity deductions and credits. Amend tax form    Deductions or losses from passive activities are limited. Amend tax form You generally cannot offset income, other than passive income, with losses from passive activities. Amend tax form Nor can you offset taxes on income, other than passive income, with credits resulting from passive activities. Amend tax form Any excess loss or credit is carried forward to the next tax year. Amend tax form   For a detailed discussion of these rules, see Publication 925. Amend tax form    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. Amend tax form Real estate professionals. Amend tax form   Rental activities in which you materially participated during the year are not passive activities if, for that year, you were a real estate professional. Amend tax form For a detailed discussion of the requirements, see Publication 527. Amend tax form For a detailed discussion of material participation, see Publication 925. Amend tax form 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. Amend tax form Instead, follow the rules explained in Personal Use of Dwelling Unit (Including Vacation Home), earlier. Amend tax form 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. Amend tax form This special allowance is an exception to the general rule disallowing losses in excess of income from passive activities. Amend tax form 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. Amend tax form Active participation. Amend tax form   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. Amend tax form Management decisions that may count as active participation include approving new tenants, deciding on rental terms, approving expenditures, and similar decisions. Amend tax form Maximum special allowance. Amend tax form   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. Amend tax form   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. Amend tax form 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. Amend tax form   Generally, if your MAGI is $150,000 or more ($75,000 or more if you are married filing separately), there is no special allowance. Amend tax form More information. Amend tax form   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. Amend tax form How To Report Rental Income and Expenses The basic form for reporting residential rental income and expenses is Schedule E (Form 1040). Amend tax form However, do not use that schedule to report a not-for-profit activity. Amend tax form See Not Rented for Profit, earlier. Amend tax form Providing substantial services. Amend tax form   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). Amend tax form Substantial services do not include the furnishing of heat and light, cleaning of public areas, trash collection, etc. Amend tax form For information, see Publication 334, Tax Guide for Small Business. Amend tax form You also may have to pay self-employment tax on your rental income using Schedule SE (Form 1040), Self-Employment Tax. Amend tax form   Use Form 1065, U. Amend tax form S. Amend tax form Return of Partnership Income, if your rental activity is a partnership (including a partnership with your spouse unless it is a qualified joint venture). Amend tax form Qualified joint venture. Amend tax form   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. Amend tax form 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. Amend tax form For more information, see Publication 527. Amend tax form Form 1098, Mortgage Interest Statement. Amend tax form    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. Amend tax form 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. Amend tax form Attach a statement to your return showing the name and address of the other person. Amend tax form In the left margin of Schedule E, next to line 13, enter “See attached. Amend tax form ” Schedule E (Form 1040) If you rent buildings, rooms, or apartments, and provide basic services such as heat and light, trash collection, etc. Amend tax form , you normally report your rental income and expenses on Schedule E, Part I. Amend tax form List your total income, expenses, and depreciation for each rental property. Amend tax form Be sure to enter the number of fair rental and personal use days on line 2. Amend tax form If you have more than three rental or royalty properties, complete and attach as many Schedules E as are needed to list the properties. Amend tax form Complete lines 1 and 2 for each property. Amend tax form However, fill in lines 23a through 26 on only one Schedule E. Amend tax form On Schedule E, page 1, line 18, enter the depreciation you are claiming for each property. Amend tax form To find out if you need to attach Form 4562, see Form 4562, in chapter 3 of Publication 527. Amend tax form If you have a loss from your rental real estate activity, you also may need to complete one or both of the following forms. Amend tax form Form 6198, At-Risk Limitations. Amend tax form See At-Risk Rules , earlier. Amend tax form Also see Publication 925. Amend tax form Form 8582, Passive Activity Loss Limitations. Amend tax form See Passive Activity Limits , earlier. Amend tax form Page 2 of Schedule E is used to report income or loss from partnerships, S corporations, estates, trusts, and real estate mortgage investment conduits. Amend tax form 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. Amend tax form Also, include the amount from line 26 (Part I) in the “Total income or (loss)” on line 41 (Part V). Amend tax form Worksheet 9-1. Amend tax form 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. Amend tax form Did you use the dwelling unit as a home this year? (See Dwelling Unit Used as a Home . Amend tax form ) 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. Amend tax form Rental Use Percentage A. Amend tax form Total days available for rent at fair rental price A. Amend tax form       B. Amend tax form Total days available for rent (line A) but not rented B. Amend tax form       C. Amend tax form Total days of rental use. Amend tax form Subtract line B from line A C. Amend tax form       D. Amend tax form Total days of personal use (including days rented at less than fair rental price) D. Amend tax form       E. Amend tax form Total days of rental and personal use. Amend tax form Add lines C and D E. Amend tax form       F. Amend tax form Percentage of expenses allowed for rental. Amend tax form Divide line C by line E     F. Amend tax form   PART II. Amend tax form Allowable Rental Expenses 1. Amend tax form Enter rents received 1. Amend tax form   2a. Amend tax form Enter the rental portion of deductible home mortgage interest and qualified mortgage insurance premiums (see instructions) 2a. Amend tax form       b. Amend tax form Enter the rental portion of real estate taxes b. Amend tax form       c. Amend tax form Enter the rental portion of deductible casualty and theft losses (see instructions) c. Amend tax form       d. Amend tax form Enter direct rental expenses (see instructions) d. Amend tax form       e. Amend tax form Fully deductible rental expenses. Amend tax form Add lines 2a–2d. Amend tax form Enter here and  on the appropriate lines on Schedule E (see instructions) 2e. Amend tax form   3. Amend tax form Subtract line 2e from line 1. Amend tax form If zero or less, enter -0- 3. Amend tax form   4a. Amend tax form Enter the rental portion of expenses directly related to operating or maintaining  the dwelling unit (such as repairs, insurance, and utilities) 4a. Amend tax form       b. Amend tax form Enter the rental portion of excess mortgage interest and qualified mortgage insurance premiums (see instructions) b. Amend tax form       c. Amend tax form Carryover of operating expenses from 2012 worksheet c. Amend tax form       d. Amend tax form Add lines 4a–4c d. Amend tax form       e. Amend tax form Allowable expenses. Amend tax form Enter the smaller of line 3 or line 4d (see instructions) 4e. Amend tax form   5. Amend tax form Subtract line 4e from line 3. Amend tax form If zero or less, enter -0- 5. Amend tax form   6a. Amend tax form Enter the rental portion of excess casualty and theft losses (see instructions) 6a. Amend tax form       b. Amend tax form Enter the rental portion of depreciation of the dwelling unit b. Amend tax form       c. Amend tax form Carryover of excess casualty losses and depreciation from 2012 worksheet c. Amend tax form       d. Amend tax form Add lines 6a–6c d. Amend tax form       e. Amend tax form Allowable excess casualty and theft losses and depreciation. Amend tax form Enter the smaller of  line 5 or line 6d (see instructions) 6e. Amend tax form   PART III. Amend tax form Carryover of Unallowed Expenses to Next Year 7a. Amend tax form Operating expenses to be carried over to next year. Amend tax form Subtract line 4e from line 4d 7a. Amend tax form   b. Amend tax form Excess casualty and theft losses and depreciation to be carried over to next year. Amend tax form  Subtract line 6e from line 6d b. Amend tax form   Worksheet 9-1 Instructions. Amend tax form Worksheet for Figuring Rental Deductions for a Dwelling Unit Used as a Home Caution. Amend tax form 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. Amend tax form Line 2a. Amend tax form Figure the mortgage interest on the dwelling unit that you could deduct on Schedule A as if you had not rented the unit. Amend tax form Do not include interest on a loan that did not benefit the dwelling unit. Amend tax form 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. Amend tax form Include interest on a loan used to buy, build, or improve the dwelling unit, or to refinance such a loan. Amend tax form Include the rental portion of this interest in the total you enter on line 2a of the worksheet. Amend tax form   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. Amend tax form See the Schedule A instructions. Amend tax form However, figure your adjusted gross income (Form 1040, line 38) without your rental income and expenses from the dwelling unit. Amend tax form See Line 4b to deduct the part of the qualified mortgage insurance premiums not allowed because of the adjusted gross income limit. Amend tax form Include the rental portion of the amount from Schedule A, line 13, in the total you enter on line 2a of the worksheet. Amend tax form   Note. Amend tax form Do not file this Schedule A or use it to figure the amount to deduct on line 13 of that schedule. Amend tax form Instead, figure the personal portion on a separate Schedule A. Amend tax form 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. Amend tax form           Line 2c. Amend tax form 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. Amend tax form To do this, complete Section A of Form 4684, Casualties and Thefts, treating the losses as personal losses. Amend tax form If any of the loss is due to a federally declared disaster, see the Instructions for Form 4684. Amend tax form On Form 4684, line 17, enter 10% of your adjusted gross income figured without your rental income and expenses from the dwelling unit. Amend tax form Enter the rental portion of the result from Form 4684, line 18, on line 2c of this worksheet. Amend tax form   Note. Amend tax form Do not file this Form 4684 or use it to figure your personal losses on Schedule A. Amend tax form Instead, figure the personal portion on a separate Form 4684. Amend tax form           Line 2d. Amend tax form Enter the total of your rental expenses that are directly related only to the rental activity. Amend tax form These include interest on loans used for rental activities other than to buy, build, or improve the dwelling unit. Amend tax form Also include rental agency fees, advertising, office supplies, and depreciation on office equipment used in your rental activity. Amend tax form           Line 2e. Amend tax form 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. Amend tax form Enter the amounts on lines 2a, 2b, 2c, and 2d on the appropriate lines of Schedule E. Amend tax form           Line 4b. Amend tax form 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. Amend tax form 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. Amend tax form Do not include interest on a loan that did not benefit the dwelling unit (as explained in the line 2a instructions). Amend tax form           Line 4e. Amend tax form 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. Amend tax form *           Line 6a. Amend tax form To find the rental portion of excess casualty and theft losses, use the Form 4684 you prepared for line 2c of this worksheet. Amend tax form   A. Amend tax form Enter the amount from Form 4684, line 10       B. Amend tax form Enter the rental portion of line A       C. Amend tax form Enter the amount from line 2c of this worksheet       D. Amend tax form Subtract line C from line B. Amend tax form Enter the result here and on line 6a of this worksheet               Line 6e. Amend tax form 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. Amend tax form * *Allocating the limited deduction. Amend tax form 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. Amend tax form Enter the amount you allocate to each expense on the appropriate line of Schedule E, Part I. Amend tax form Prev  Up  Next   Home   More Online Publications