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Filling Out 1040ez

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Filling Out 1040ez

Filling out 1040ez Index , Hardest Hit Fund and Emergency Homeowners' Loan Programs. Filling out 1040ez , Form 1098. Filling out 1040ez , How To Report, Form 1098. Filling out 1040ez A Acquisition debt, Fully deductible interest. Filling out 1040ez , Home Acquisition Debt, Part of home not a qualified home. Filling out 1040ez Alimony, Divorced or separated individuals. Filling out 1040ez Amortization Points, General Rule Appraisal fees, Amounts charged for services. Filling out 1040ez Armed forces Housing allowance, Ministers' and military housing allowance. Filling out 1040ez Assistance (see Tax help) Average mortgage balance, Average Mortgage Balance B Borrowers More than one, More than one borrower. Filling out 1040ez Seller-paid points, treatment by buyer, Treatment by buyer. Filling out 1040ez Business Average mortgage balance, total amount of interest otherwise allowable to each activity, Line 13 Mortgage proceeds used for, Mortgage proceeds used for business or investment. Filling out 1040ez C Clergy Ministers' and military housing allowance, Ministers' and military housing allowance. Filling out 1040ez Cooperative housing, Cooperative apartment owner. Filling out 1040ez , Cooperative apartment owner. Filling out 1040ez , Special Rule for Tenant-Stockholders in Cooperative Housing Corporations, Form 1098. Filling out 1040ez Cost of home or improvements, Cost of home or improvements. Filling out 1040ez Credits, Mortgage interest credit. Filling out 1040ez D Date of mortgage, Date of the mortgage. Filling out 1040ez Debt Choice to treat as not secured by home, Choice to treat the debt as not secured by your home. Filling out 1040ez Grandfathered, Fully deductible interest. Filling out 1040ez , Grandfathered Debt, Line-of-credit mortgage. Filling out 1040ez Home acquisition, Fully deductible interest. Filling out 1040ez , Home Acquisition Debt Home equity, Fully deductible interest. Filling out 1040ez , Home Equity Debt Home equity only (Table 1), Home equity debt only. Filling out 1040ez Not secured by home, Debt not secured by home. Filling out 1040ez Secured, Secured Debt Deductions, Part I. Filling out 1040ez Home Mortgage Interest, Hardest Hit Fund and Emergency Homeowners' Loan Programs. Filling out 1040ez Home office, Office in home. Filling out 1040ez Mortgage insurance premiums, Claiming your deductible mortgage insurance premiums. Filling out 1040ez Points, General Rule, Claiming your deductible points. Filling out 1040ez Deed preparation costs, Amounts charged for services. Filling out 1040ez Divorced taxpayers, Divorced or separated individuals. Filling out 1040ez , Acquiring an interest in a home because of a divorce. Filling out 1040ez E Emergency Homeowners' Loan Program, Hardest Hit Fund and Emergency Homeowners' Loan Programs. Filling out 1040ez Equity debt, Fully deductible interest. Filling out 1040ez , Home Equity Debt, Fair market value (FMV). Filling out 1040ez Equity debt only (Table 1), Home equity debt only. Filling out 1040ez F Fair market value (FMV), Fair market value (FMV). Filling out 1040ez Fees Appraisal, Amounts charged for services. Filling out 1040ez Notaries, Amounts charged for services. Filling out 1040ez Points (see Points) Figures (see Tables and figures) Form 1040, Schedule A, How To Report, Table 2. Filling out 1040ez Where To Deduct Your Interest Expense Form 1040, Schedule C or C-EZ, Table 2. Filling out 1040ez Where To Deduct Your Interest Expense Form 1040, Schedule E, Table 2. Filling out 1040ez Where To Deduct Your Interest Expense Form 1040, Schedule F, Table 2. Filling out 1040ez Where To Deduct Your Interest Expense Form 1098, Form 1098, Mortgage Interest Statement Mortgage insurance premiums, Form 1098. Filling out 1040ez Form 8396, Mortgage interest credit. Filling out 1040ez Free tax services, Free help with your tax return. Filling out 1040ez G Grandfathered debt, Fully deductible interest. Filling out 1040ez , Grandfathered Debt, Line-of-credit mortgage. Filling out 1040ez Ground rents, Redeemable ground rents. Filling out 1040ez H Hardest Hit Fund Program, Hardest Hit Fund and Emergency Homeowners' Loan Programs. Filling out 1040ez Help (see Tax help) Home, Publication 936 - Introductory Material Acquisition debt, Fully deductible interest. Filling out 1040ez , Home Acquisition Debt Construction, Home under construction. Filling out 1040ez Cost of, Cost of home or improvements. Filling out 1040ez Destroyed, Home destroyed. Filling out 1040ez Divided use, Divided use of your home. Filling out 1040ez , Part of home not a qualified home. Filling out 1040ez , Part of home not a qualified home. Filling out 1040ez Equity debt, Fully deductible interest. Filling out 1040ez , Home Equity Debt Equity debt only (Table 1), Home equity debt only. Filling out 1040ez Fair market value, Fair market value (FMV). Filling out 1040ez Grandfathered debt, Fully deductible interest. Filling out 1040ez , Grandfathered Debt, Line-of-credit mortgage. Filling out 1040ez Improvement loan, points, Home improvement loan. Filling out 1040ez Main, Main home. Filling out 1040ez Office in, Office in home. Filling out 1040ez Qualified, Qualified Home Renting out part of, Renting out part of home. Filling out 1040ez Sale of, Sale of home. Filling out 1040ez Second, Second home. Filling out 1040ez Time-sharing arrangements, Time-sharing arrangements. Filling out 1040ez Housing allowance Ministers and military, Ministers' and military housing allowance. Filling out 1040ez I Improvements Cost of, Cost of home or improvements. Filling out 1040ez Home acquisition debt, Mortgage treated as used to buy, build, or improve home. Filling out 1040ez Points, Home improvement loan. Filling out 1040ez Substantial, Substantial improvement. Filling out 1040ez Interest, Part I. Filling out 1040ez Home Mortgage Interest (see also Mortgage interest) Interest rate method, Interest paid divided by interest rate method. Filling out 1040ez Refunded, Refunds of interest. Filling out 1040ez , Refunded interest. Filling out 1040ez Where to deduct, Table 2. Filling out 1040ez Where To Deduct Your Interest Expense Investments Average mortgage balance and total amount of interest allowable, Line 13 Mortgage proceeds used for, Mortgage proceeds invested in tax-exempt securities. Filling out 1040ez , Mortgage proceeds used for business or investment. Filling out 1040ez J Joint returns, Married taxpayers. Filling out 1040ez L Lender mortgage statements, Statements provided by your lender. Filling out 1040ez Limits Cooperative housing, mortgage interest deduction, Limits on deduction. Filling out 1040ez Deductibility of mortgage insurance premiums, Limit on deduction. Filling out 1040ez Deductibility of points, Limits on deduction. Filling out 1040ez Home acquisition debt, Home acquisition debt limit. Filling out 1040ez Home equity debt, Home equity debt limit. Filling out 1040ez Home mortgage interest deduction, Form 1098. Filling out 1040ez Qualified loan limit, Table 1. Filling out 1040ez Worksheet To Figure Your Qualified Loan Limit and Deductible Home Mortgage Interest For the Current Year See the Table 1 Instructions. Filling out 1040ez , Average Mortgage Balance Line-of-credit mortgage, Line-of-credit mortgage. Filling out 1040ez Loans, Mortgage proceeds used for business or investment. Filling out 1040ez , Mortgage treated as used to buy, build, or improve home. Filling out 1040ez (see also Mortgages) Home improvement, points, Home improvement loan. Filling out 1040ez Qualified loan limit, Table 1. Filling out 1040ez Worksheet To Figure Your Qualified Loan Limit and Deductible Home Mortgage Interest For the Current Year See the Table 1 Instructions. Filling out 1040ez M Main home, Main home. Filling out 1040ez Married taxpayers, Married taxpayers. Filling out 1040ez Military housing allowance, Ministers' and military housing allowance. Filling out 1040ez Ministers' housing allowance, Ministers' and military housing allowance. Filling out 1040ez Missing children, photographs of, Reminders Mixed-use mortgages, Mixed-use mortgages. Filling out 1040ez Mortgage insurance premiums Claiming deductible, Claiming your deductible mortgage insurance premiums. Filling out 1040ez Mortgage interest, Publication 936 - Introductory Material, Part I. Filling out 1040ez Home Mortgage Interest Cooperative housing, Figuring deductible home mortgage interest. Filling out 1040ez Credit, Mortgage interest credit. Filling out 1040ez Fully deductible interest, Fully deductible interest. Filling out 1040ez Home mortgage interest, Part I. Filling out 1040ez Home Mortgage Interest, Hardest Hit Fund and Emergency Homeowners' Loan Programs. Filling out 1040ez How to report, How To Report Late payment charges, Late payment charge on mortgage payment. Filling out 1040ez Limits on deduction, Part II. Filling out 1040ez Limits on Home Mortgage Interest Deduction Ministers' and military housing allowance, Ministers' and military housing allowance. Filling out 1040ez Prepaid interest, Prepaid interest. Filling out 1040ez , Prepaid interest on Form 1098. Filling out 1040ez Prepayment penalty, Mortgage prepayment penalty. Filling out 1040ez Refunds, Refunds of interest. Filling out 1040ez , Refunded interest. Filling out 1040ez Sale of home, Sale of home. Filling out 1040ez Special situations, Special Situations Statement, Form 1098, Mortgage Interest Statement Where to deduct, Table 2. Filling out 1040ez Where To Deduct Your Interest Expense Worksheet to figure (Table 1), Table 1. Filling out 1040ez Worksheet To Figure Your Qualified Loan Limit and Deductible Home Mortgage Interest For the Current Year See the Table 1 Instructions. Filling out 1040ez Mortgages Assistance payments (under sec. Filling out 1040ez 235 of National Housing Act), Mortgage assistance payments under section 235 of the National Housing Act. Filling out 1040ez Average balance, Average Mortgage Balance Date of, Date of the mortgage. Filling out 1040ez Ending early, Mortgage ending early. Filling out 1040ez Late qualifying, Mortgage that qualifies later. Filling out 1040ez Line-of-credit, Line-of-credit mortgage. Filling out 1040ez Mixed-use, Mixed-use mortgages. Filling out 1040ez Preparation costs for note or deed of trust, Amounts charged for services. Filling out 1040ez Proceeds invested in tax-exempt securities, Mortgage proceeds invested in tax-exempt securities. Filling out 1040ez Proceeds used for business, Mortgage proceeds used for business or investment. Filling out 1040ez Proceeds used for investment, Mortgage proceeds used for business or investment. Filling out 1040ez Qualified loan limit, Table 1. Filling out 1040ez Worksheet To Figure Your Qualified Loan Limit and Deductible Home Mortgage Interest For the Current Year See the Table 1 Instructions. Filling out 1040ez , Average Mortgage Balance Refinanced, Refinancing. Filling out 1040ez , Refinanced home acquisition debt. Filling out 1040ez , Refinanced grandfathered debt. Filling out 1040ez Reverse, Reverse mortgages. Filling out 1040ez Statements provided by lender, Statements provided by your lender. Filling out 1040ez To buy, build, or improve, Mortgage treated as used to buy, build, or improve home. Filling out 1040ez Wraparound, Wraparound mortgage. Filling out 1040ez N Nonredeemable ground rents, Nonredeemable ground rents. Filling out 1040ez Notary fees, Amounts charged for services. Filling out 1040ez O Office in home, Office in home. Filling out 1040ez P Penalties Mortgage prepayment, Mortgage prepayment penalty. Filling out 1040ez Points, Points, Deduction Allowed in Year Paid, Form 1098. Filling out 1040ez Claiming deductible, Claiming your deductible points. Filling out 1040ez Exception to general rule, Deduction Allowed in Year Paid Excess, Excess points. Filling out 1040ez Funds provided less than, Funds provided are less than points. Filling out 1040ez General rule, General Rule Home improvement loans, Home improvement loan. Filling out 1040ez Seller paid, Points paid by the seller. Filling out 1040ez Prepaid interest, Prepaid interest. Filling out 1040ez , Prepaid interest on Form 1098. Filling out 1040ez Prepayment penalties, Mortgage prepayment penalty. Filling out 1040ez Publications (see Tax help) Q Qualified homes, Qualified Home Qualified loan limit Average mortgage balance, Average Mortgage Balance Worksheet to figure (Table 1), Table 1. Filling out 1040ez Worksheet To Figure Your Qualified Loan Limit and Deductible Home Mortgage Interest For the Current Year See the Table 1 Instructions. Filling out 1040ez R Redeemable ground rents, Redeemable ground rents. Filling out 1040ez Refinancing, Refinancing. Filling out 1040ez Grandfathered debt, Refinanced grandfathered debt. Filling out 1040ez Home acquisition debt, Refinanced home acquisition debt. Filling out 1040ez Refunds, Refunds of interest. Filling out 1040ez , Refunded interest. Filling out 1040ez Rent Nonredeemable ground rents, Nonredeemable ground rents. Filling out 1040ez Redeemable ground rents, Redeemable ground rents. Filling out 1040ez Rental payments, Rental payments. Filling out 1040ez Renting of home Part of, Renting out part of home. Filling out 1040ez Time-sharing arrangements, Rental of time-share. Filling out 1040ez Repairs, Substantial improvement. Filling out 1040ez Reverse Mortgages, Reverse mortgages. Filling out 1040ez S Sale of home, Sale of home. Filling out 1040ez Second home, Second home. Filling out 1040ez , Deduction Allowed in Year Paid Secured debt, Secured Debt Seller-paid points, Points paid by the seller. Filling out 1040ez Separate returns, Separate returns. Filling out 1040ez Separated taxpayers, Divorced or separated individuals. Filling out 1040ez Spouses, Married taxpayers. Filling out 1040ez Statements provided by lender, Statements provided by your lender. Filling out 1040ez Stock Cooperative housing, Stock used to secure debt. Filling out 1040ez T Tables and figures Deductible home mortgage interest Fully deductible, determination of (Figure A), Fully deductible interest. Filling out 1040ez How to figure (Table 1), Table 1. Filling out 1040ez Worksheet To Figure Your Qualified Loan Limit and Deductible Home Mortgage Interest For the Current Year See the Table 1 Instructions. Filling out 1040ez Mortgage to buy, build, or improve home (Figure C), Mortgage treated as used to buy, build, or improve home. Filling out 1040ez Points (Figure B), Points Qualified loan limit worksheet (Table 1), Table 1. Filling out 1040ez Worksheet To Figure Your Qualified Loan Limit and Deductible Home Mortgage Interest For the Current Year See the Table 1 Instructions. Filling out 1040ez Tax credits, Mortgage interest credit. Filling out 1040ez Tax help, How To Get Tax Help Tax-exempt securities Mortgage proceeds invested in, Mortgage proceeds invested in tax-exempt securities. Filling out 1040ez Time-sharing arrangements, Time-sharing arrangements. Filling out 1040ez V Valuation Fair market value, Fair market value (FMV). Filling out 1040ez W Worksheets Deductible home mortgage interest, Table 1. Filling out 1040ez Worksheet To Figure Your Qualified Loan Limit and Deductible Home Mortgage Interest For the Current Year See the Table 1 Instructions. Filling out 1040ez Qualified loan limit, Table 1. Filling out 1040ez Worksheet To Figure Your Qualified Loan Limit and Deductible Home Mortgage Interest For the Current Year See the Table 1 Instructions. Filling out 1040ez Wraparound mortgages, Wraparound mortgage. Filling out 1040ez Prev  Up     Home   More Online Publications
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The Filling Out 1040ez

Filling out 1040ez 3. Filling out 1040ez   Reporting Rental Income, Expenses, and Losses Table of Contents Which Forms To UseSchedule E (Form 1040) Schedule C (Form 1040), Profit or Loss From Business Qualified Joint Venture Limits on Rental LossesAt-Risk Rules Passive Activity Limits Casualties and Thefts Example Figuring the net income or loss for a residential rental activity may involve more than just listing the income and deductions on Schedule E (Form 1040). Filling out 1040ez There are activities which do not qualify to use Schedule E, such as when the activity is not engaged in to make a profit or when you provide substantial services in conjunction with the property. Filling out 1040ez There are also the limitations which may need to be applied if you have a net loss on Schedule E. Filling out 1040ez There are two: (1) the limitation based on the amount of investment you have at risk in your rental activity, and (2) the special limits imposed on passive activities. Filling out 1040ez You may also have a gain or loss related to your rental property from a casualty or theft. Filling out 1040ez This is considered separately from the income and expense information you report on Schedule E. Filling out 1040ez Which Forms To Use The basic form for reporting residential rental income and expenses is Schedule E (Form 1040). Filling out 1040ez However, do not use that schedule to report a not-for-profit activity. Filling out 1040ez See Not Rented for Profit , in chapter 4. Filling out 1040ez There are also other rental situations in which forms other than Schedule E would be used. Filling out 1040ez Schedule E (Form 1040) If you rent buildings, rooms, or apartments, and provide basic services such as heat and light, trash collection, etc. Filling out 1040ez , you normally report your rental income and expenses on Schedule E, Part I. Filling out 1040ez List your total income, expenses, and depreciation for each rental property. Filling out 1040ez Be sure to enter the number of fair rental and personal use days on line 2. Filling out 1040ez If you have more than three rental or royalty properties, complete and attach as many Schedules E as are needed to list the properties. Filling out 1040ez Complete lines 1 and 2 for each property. Filling out 1040ez However, fill in lines 23a through 26 on only one Schedule E. Filling out 1040ez On Schedule E, page 1, line 18, enter the depreciation you are claiming for each property. Filling out 1040ez To find out if you need to attach Form 4562, see Form 4562 , later. Filling out 1040ez If you have a loss from your rental real estate activity, you also may need to complete one or both of the following forms. Filling out 1040ez Form 6198, At-Risk Limitations. Filling out 1040ez See At-Risk Rules , later. Filling out 1040ez Also see Publication 925. Filling out 1040ez Form 8582, Passive Activity Loss Limitations. Filling out 1040ez See Passive Activity Limits , later. Filling out 1040ez Page 2 of Schedule E is used to report income or loss from partnerships, S corporations, estates, trusts, and real estate mortgage investment conduits. Filling out 1040ez 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. Filling out 1040ez Also, include the amount from line 26 (Part I) in the “Total income or (loss)” on line 41 (Part V). Filling out 1040ez Form 4562. Filling out 1040ez   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 2013; 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. Filling out 1040ez Otherwise, figure your depreciation on your own worksheet. Filling out 1040ez You do not have to attach these computations to your return, but you should keep them in your records for future reference. Filling out 1040ez   See Publication 946 for information on preparing Form 4562. Filling out 1040ez Schedule C (Form 1040), Profit or Loss From Business Generally, Schedule C is used when you provide substantial services in conjunction with the property or the rental is part of a trade or business as a real estate dealer. Filling out 1040ez Providing substantial services. Filling out 1040ez   If you provide substantial services that are primarily for your tenant's convenience, such as regular cleaning, changing linen, or maid service, you 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. Filling out 1040ez Use Form 1065, U. Filling out 1040ez S. Filling out 1040ez Return of Partnership Income, if your rental activity is a partnership (including a partnership with your spouse unless it is a qualified joint venture). Filling out 1040ez Substantial services do not include the furnishing of heat and light, cleaning of public areas, trash collection, etc. Filling out 1040ez For information, see Publication 334, Tax Guide for Small Business. Filling out 1040ez Also, you may have to pay self-employment tax on your rental income using Schedule SE (Form 1040), Self-Employment Tax. Filling out 1040ez For a discussion of “substantial services,” see Real Estate Rents in Publication 334, chapter 5. Filling out 1040ez Qualified Joint Venture If you and your spouse each materially participate (see Material participation under Passive Activity Limits, later) 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. Filling out 1040ez 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. Filling out 1040ez If you make this election, you must report rental real estate income on Schedule E (or Schedule C if you provide substantial services). Filling out 1040ez You will not be required to file Form 1065 for any year the election is in effect. Filling out 1040ez Rental real estate income generally is not included in net earnings from self-employment subject to self-employment tax and generally is subject to the passive activity limits. Filling out 1040ez If you and your spouse filed a Form 1065 for the year prior to the election, the partnership terminates at the end of the tax year immediately preceding the year the election takes effect. Filling out 1040ez For more information on qualified joint ventures, go to IRS. Filling out 1040ez gov and enter “qualified joint venture” in the search box. Filling out 1040ez 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. Filling out 1040ez You must consider these rules in the order shown below. Filling out 1040ez Both are discussed in this section. Filling out 1040ez At-risk rules. Filling out 1040ez These rules are applied first if there is investment in your rental real estate activity for which you are not at risk. Filling out 1040ez This applies only if the real property was placed in service after 1986. Filling out 1040ez Passive activity limits. Filling out 1040ez 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. Filling out 1040ez However, there are exceptions. Filling out 1040ez 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. Filling out 1040ez Losses from holding real property (other than mineral property) placed in service before 1987 are not subject to the at-risk rules. Filling out 1040ez 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. Filling out 1040ez 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. Filling out 1040ez Any loss that is disallowed because of the at-risk limits is treated as a deduction from the same activity in the next tax year. Filling out 1040ez See Publication 925 for a discussion of the at-risk rules. Filling out 1040ez Form 6198. Filling out 1040ez   If you are subject to the at-risk rules, file Form 6198, At-Risk Limitations, with your tax return. Filling out 1040ez Passive Activity Limits In most cases, all rental real estate activities (except those of certain real estate professionals, discussed later) are passive activities. Filling out 1040ez 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. Filling out 1040ez For a discussion of activities that are not considered rental activities, see Rental Activities in Publication 925. Filling out 1040ez Deductions or losses from passive activities are limited. Filling out 1040ez You generally cannot offset income, other than passive income, with losses from passive activities. Filling out 1040ez Nor can you offset taxes on income, other than passive income, with credits resulting from passive activities. Filling out 1040ez Any excess loss or credit is carried forward to the next tax year. Filling out 1040ez Exceptions to the rules for figuring passive activity limits for personal use of a dwelling unit and for rental real estate with active participation are discussed later. Filling out 1040ez For a detailed discussion of these rules, see Publication 925. Filling out 1040ez Real estate professionals. Filling out 1040ez   If you are a real estate professional, complete line 43 of Schedule E. Filling out 1040ez      You qualify as a real estate professional for the tax year if you meet both of the following requirements. Filling out 1040ez More than half of the personal services you perform in all trades or businesses during the tax year are performed in real property trades or businesses in which you materially participate. Filling out 1040ez You perform more than 750 hours of services during the tax year in real property trades or businesses in which you materially participate. Filling out 1040ez If you qualify as a real estate professional, rental real estate activities in which you materially participated are not passive activities. Filling out 1040ez For purposes of determining whether you materially participated in your rental real estate activities, each interest in rental real estate is a separate activity unless you elect to treat all your interests in rental real estate as one activity. Filling out 1040ez   Do not count personal services you perform as an employee in real property trades or businesses unless you are a 5% owner of your employer. Filling out 1040ez You are a 5% owner if you own (or are considered to own) more than 5% of your employer's outstanding stock, or capital or profits interest. Filling out 1040ez   Do not count your spouse's personal services to determine whether you met the requirements listed earlier to qualify as a real estate professional. Filling out 1040ez However, you can count your spouse's participation in an activity in determining if you materially participated. Filling out 1040ez Real property trades or businesses. Filling out 1040ez   A real property trade or business is a trade or business that does any of the following with real property. Filling out 1040ez Develops or redevelops it. Filling out 1040ez Constructs or reconstructs it. Filling out 1040ez Acquires it. Filling out 1040ez Converts it. Filling out 1040ez Rents or leases it. Filling out 1040ez Operates or manages it. Filling out 1040ez Brokers it. Filling out 1040ez Choice to treat all interests as one activity. Filling out 1040ez   If you were a real estate professional and had more than one rental real estate interest during the year, you can choose to treat all the interests as one activity. Filling out 1040ez You can make this choice for any year that you qualify as a real estate professional. Filling out 1040ez If you forgo making the choice for one year, you can still make it for a later year. Filling out 1040ez   If you make the choice, it is binding for the tax year you make it and for any later year that you are a real estate professional. Filling out 1040ez This is true even if you are not a real estate professional in any intervening year. Filling out 1040ez (For that year, the exception for real estate professionals will not apply in determining whether your activity is subject to the passive activity rules. Filling out 1040ez )   See the Instructions for Schedule E for information about making this choice. Filling out 1040ez Material participation. Filling out 1040ez   Generally, you materially participated in an activity for the tax year if you were involved in its operations on a regular, continuous, and substantial basis during the year. Filling out 1040ez For details, see Publication 925 or the Instructions for Schedule C. Filling out 1040ez Participating spouse. Filling out 1040ez   If you are married, determine whether you materially participated in an activity by also counting any participation in the activity by your spouse during the year. Filling out 1040ez Do this even if your spouse owns no interest in the activity or files a separate return for the year. Filling out 1040ez Form 8582. Filling out 1040ez    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. Filling out 1040ez See Form 8582 not required , later in this chapter, to determine if you must complete Form 8582. Filling out 1040ez   If you are required to complete Form 8582 and are also subject to the at-risk rules, include the amount from Form 6198, line 21 (deductible loss) in column (b) of Form 8582, Worksheet 1 or 3, as required. Filling out 1040ez 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. Filling out 1040ez Instead, follow the rules explained in chapter 5, Personal Use of Dwelling Unit (Including Vacation Home). Filling out 1040ez Exception for Rental Real Estate 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. Filling out 1040ez This special allowance is an exception to the general rule disallowing losses in excess of income from passive activities. Filling out 1040ez 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. Filling out 1040ez Example. Filling out 1040ez Jane is single and has $40,000 in wages, $2,000 of passive income from a limited partnership, and $3,500 of passive loss from a rental real estate activity in which she actively participated. Filling out 1040ez $2,000 of Jane's $3,500 loss offsets her passive income. Filling out 1040ez The remaining $1,500 loss can be deducted from her $40,000 wages. Filling out 1040ez The special allowance is not available if you were married, lived with your spouse at any time during the year, and are filing a separate return. Filling out 1040ez Active participation. Filling out 1040ez   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. Filling out 1040ez Management decisions that may count as active participation include approving new tenants, deciding on rental terms, approving expenditures, and other similar decisions. Filling out 1040ez Example. Filling out 1040ez Mike is single and had the following income and losses during the tax year:   Salary $42,300     Dividends 300     Interest 1,400     Rental loss (4,000)   The rental loss was from the rental of a house Mike owned. Filling out 1040ez Mike had advertised and rented the house to the current tenant himself. Filling out 1040ez He also collected the rents, which usually came by mail. Filling out 1040ez All repairs were either made or contracted out by Mike. Filling out 1040ez Although the rental loss is from a passive activity, because Mike actively participated in the rental property management he can use the entire $4,000 loss to offset his other income. Filling out 1040ez Maximum special allowance. Filling out 1040ez   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. Filling out 1040ez   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. Filling out 1040ez 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. Filling out 1040ez   Generally, if your MAGI is $150,000 or more ($75,000 or more if you are married filing separately), there is no special allowance. Filling out 1040ez Modified adjusted gross income (MAGI). Filling out 1040ez   This is your adjusted gross income from Form 1040, U. Filling out 1040ez S. Filling out 1040ez Individual Income Tax Return, line 38, or Form 1040NR, U. Filling out 1040ez S. Filling out 1040ez Nonresident Alien Income Tax Return, line 37, figured without taking into account: The taxable amount of social security or equivalent tier 1 railroad retirement benefits, The deductible contributions to traditional individual retirement accounts (IRAs) and section 501(c)(18) pension plans, The exclusion from income of interest from Series EE and I U. Filling out 1040ez S. Filling out 1040ez savings bonds used to pay higher educational expenses, The exclusion of amounts received under an employer's adoption assistance program, Any passive activity income or loss included on Form 8582, Any rental real estate loss allowed to real estate professionals, Any overall loss from a publicly traded partnership (see Publicly Traded Partnerships (PTPs) in the Instructions for Form 8582), The deduction allowed for one-half of self-employment tax, The deduction allowed for interest paid on student loans, The deduction for qualified tuition and related fees, and The domestic production activities deduction (see the Instructions for Form 8903). Filling out 1040ez Form 8582 not required. Filling out 1040ez   Do not complete Form 8582 if you meet all of the following conditions. Filling out 1040ez Your only passive activities were rental real estate activities in which you actively participated. Filling out 1040ez Your overall net loss from these activities is $25,000 or less ($12,500 or less if married filing separately and you lived apart from your spouse all year). Filling out 1040ez If married filing separately, you lived apart from your spouse all year. Filling out 1040ez You have no prior year unallowed losses from these (or any other passive) activities. Filling out 1040ez You have no current or prior year unallowed credits from passive activities. Filling out 1040ez Your MAGI is $100,000 or less ($50,000 or less if married filing separately and you lived apart from your spouse all year). Filling out 1040ez You do not hold any interest in a rental real estate activity as a limited partner or as a beneficiary of an estate or a trust. Filling out 1040ez   If you meet all of the conditions listed above, your rental real estate activities are not limited by the passive activity rules and you do not have to complete Form 8582. Filling out 1040ez On lines 23a through 23e of your Schedule E, enter the applicable amounts. Filling out 1040ez Casualties and Thefts As a result of a casualty or theft, you may have a loss related to your rental property. Filling out 1040ez You may be able to deduct the loss on your income tax return. Filling out 1040ez Casualty. Filling out 1040ez   This is the damage, destruction, or loss of property resulting from an identifiable event that is sudden, unexpected, or unusual. Filling out 1040ez Such events include a storm, fire, or earthquake. Filling out 1040ez Theft. Filling out 1040ez   This is defined as the unlawful taking and removing of your money or property with the intent to deprive you of it. Filling out 1040ez Gain from casualty or theft. Filling out 1040ez   It is also possible to have a gain from a casualty or theft if you receive money, including insurance, that is more than your adjusted basis in the property. Filling out 1040ez Generally, you must report this gain. Filling out 1040ez However, under certain circumstances, you may defer paying tax by choosing to postpone reporting the gain. Filling out 1040ez To do this, you generally must buy replacement property within 2 years after the close of the first tax year in which any part of your gain is realized. Filling out 1040ez In certain circumstances, the replacement period can be greater than 2 years; see Replacement Period in Publication 547 for more information. Filling out 1040ez The cost of the replacement property must be equal to or more than the net insurance or other payment you received. Filling out 1040ez More information. Filling out 1040ez   For information on business and nonbusiness casualty and theft losses, see Publication 547. Filling out 1040ez How to report. Filling out 1040ez    If you had a casualty or theft that involved property used in your rental activity, figure the net gain or loss in Section B of Form 4684, Casualties and Thefts. Filling out 1040ez Follow the Instructions for Form 4684 for where to carry your net gain or loss. Filling out 1040ez Example In February 2008, Marie Pfister bought a rental house for $135,000 (house $120,000 and land $15,000) and immediately began renting it out. Filling out 1040ez In 2013, she rented it all 12 months for a monthly rental fee of $1,125. Filling out 1040ez In addition to her rental income of $13,500 (12 x $1,125), Marie had the following expenses. Filling out 1040ez Mortgage interest $8,000 Fire insurance (1-year policy) 250 Miscellaneous repairs 400 Real estate taxes imposed and paid 500 Maintenance 200 Marie depreciates the residential rental property under MACRS GDS. Filling out 1040ez This means using the straight line method over a recovery period of 27. Filling out 1040ez 5 years. Filling out 1040ez She uses Table 2-2d to find her depreciation percentage. Filling out 1040ez Because she placed the property in service in February 2008, she continues to use that row of Table 2-2d. Filling out 1040ez For year 6, the rate is 3. Filling out 1040ez 636%. Filling out 1040ez Marie figures her net rental income or loss for the house as follows: Total rental income received  ($1,125 × 12) $13,500 Minus: Expenses     Mortgage interest $8,000   Fire insurance 250   Miscellaneous repairs 400   Real estate taxes 500   Maintenance 200   Total expenses 9,350 Balance $4,150 Minus: Depreciation ($120,000 x 3. Filling out 1040ez 636%) 4,363 Net rental (loss) for house ($213)       Marie had a net loss for the year. Filling out 1040ez Because she actively participated in her passive rental real estate activity and her loss was less than $25,000, she can deduct the loss on her return. Filling out 1040ez Marie also meets all of the requirements for not having to file Form 8582. Filling out 1040ez She uses Schedule E, Part I, to report her rental income and expenses. Filling out 1040ez She enters her income, expenses, and depreciation for the house in the column for Property A and enters her loss on line 22. Filling out 1040ez Form 4562 is not required. Filling out 1040ez Prev  Up  Next   Home   More Online Publications