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How To Amend My 2011 Tax Return

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How To Amend My 2011 Tax Return

How to amend my 2011 tax return 9. How to amend my 2011 tax return   Rental Income and Expenses Table of Contents Introduction Useful Items - You may want to see: Rental Income Rental ExpensesVacant while listed for sale. How to amend my 2011 tax return 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. How to amend my 2011 tax return Dividing Expenses Dwelling Unit Used as a Home Reporting Income and Deductions DepreciationChanging your accounting method to deduct unclaimed depreciation. How to amend my 2011 tax return 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. How to amend my 2011 tax return It also covers the following topics. How to amend my 2011 tax return Personal use of dwelling unit (including vacation home). How to amend my 2011 tax return Depreciation. How to amend my 2011 tax return Limits on rental losses. How to amend my 2011 tax return How to report your rental income and expenses. How to amend my 2011 tax return If you sell or otherwise dispose of your rental property, see Publication 544, Sales and Other Dispositions of Assets. How to amend my 2011 tax return If you have a loss from damage to, or theft of, rental property, see Publication 547, Casualties, Disasters, and Thefts. How to amend my 2011 tax return 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. How to amend my 2011 tax return See Publication 527, Residential Rental Property, for more information. How to amend my 2011 tax return 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. How to amend my 2011 tax return Rental income is any payment you receive for the use or occupation of property. How to amend my 2011 tax return In addition to amounts you receive as normal rent payments, there are other amounts that may be rental income. How to amend my 2011 tax return When to report. How to amend my 2011 tax return   If you are a cash-basis taxpayer, you report rental income on your return for the year you actually or constructively receive it. How to amend my 2011 tax return You are a cash-basis taxpayer if you report income in the year you receive it, regardless of when it was earned. How to amend my 2011 tax return You constructively receive income when it is made available to you, for example, by being credited to your bank account. How to amend my 2011 tax return   For more information about when you constructively receive income, see Accounting Methods in chapter 1. How to amend my 2011 tax return Advance rent. How to amend my 2011 tax return   Advance rent is any amount you receive before the period that it covers. How to amend my 2011 tax return 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. How to amend my 2011 tax return Example. How to amend my 2011 tax return You sign a 10-year lease to rent your property. How to amend my 2011 tax return 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. How to amend my 2011 tax return You must include $10,000 in your income in the first year. How to amend my 2011 tax return Canceling a lease. How to amend my 2011 tax return   If your tenant pays you to cancel a lease, the amount you receive is rent. How to amend my 2011 tax return Include the payment in your income in the year you receive it regardless of your method of accounting. How to amend my 2011 tax return Expenses paid by tenant. How to amend my 2011 tax return   If your tenant pays any of your expenses, the payments are rental income. How to amend my 2011 tax return Because you must include this amount in income, you can deduct the expenses if they are deductible rental expenses. How to amend my 2011 tax return See Rental Expenses , later, for more information. How to amend my 2011 tax return Property or services. How to amend my 2011 tax return   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. How to amend my 2011 tax return   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. How to amend my 2011 tax return Security deposits. How to amend my 2011 tax return   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. How to amend my 2011 tax return 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. How to amend my 2011 tax return   If an amount called a security deposit is to be used as a final payment of rent, it is advance rent. How to amend my 2011 tax return Include it in your income when you receive it. How to amend my 2011 tax return Part interest. How to amend my 2011 tax return   If you own a part interest in rental property, you must report your part of the rental income from the property. How to amend my 2011 tax return Rental of property also used as your home. How to amend my 2011 tax return   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. How to amend my 2011 tax return However, you can deduct on Schedule A (Form 1040) the interest, taxes, and casualty and theft losses that are allowed for nonrental property. How to amend my 2011 tax return See Personal Use of Dwelling Unit (Including Vacation Home) , later. How to amend my 2011 tax return Rental Expenses This part discusses expenses of renting property that you ordinarily can deduct from your rental income. How to amend my 2011 tax return 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. How to amend my 2011 tax return Depreciation , which you can also deduct from your rental income, is discussed later. How to amend my 2011 tax return Personal use of rental property. How to amend my 2011 tax return   If you sometimes use your rental property for personal purposes, you must divide your expenses between rental and personal use. How to amend my 2011 tax return Also, your rental expense deductions may be limited. How to amend my 2011 tax return See Personal Use of Dwelling Unit (Including Vacation Home) , later. How to amend my 2011 tax return Part interest. How to amend my 2011 tax return   If you own a part interest in rental property, you can deduct expenses that you paid according to your percentage of ownership. How to amend my 2011 tax return When to deduct. How to amend my 2011 tax return   If you are a cash-basis taxpayer, you generally deduct your rental expenses in the year you pay them. How to amend my 2011 tax return Depreciation. How to amend my 2011 tax return   You can begin to depreciate rental property when it is ready and available for rent. How to amend my 2011 tax return See Placed-in-Service under When Does Depreciation Begin and End in chapter 2 of Publication 527. How to amend my 2011 tax return Pre-rental expenses. How to amend my 2011 tax return   You can deduct your ordinary and necessary expenses for managing, conserving, or maintaining rental property from the time you make it available for rent. How to amend my 2011 tax return Uncollected rent. How to amend my 2011 tax return   If you are a cash-basis taxpayer, do not deduct uncollected rent. How to amend my 2011 tax return Because you have not included it in your income, it is not deductible. How to amend my 2011 tax return Vacant rental property. How to amend my 2011 tax return   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. How to amend my 2011 tax return However, you cannot deduct any loss of rental income for the period the property is vacant. How to amend my 2011 tax return Vacant while listed for sale. How to amend my 2011 tax return   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. How to amend my 2011 tax return If the property is not held out and available for rent while listed for sale, the expenses are not deductible rental expenses. How to amend my 2011 tax return 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. How to amend my 2011 tax return Improvements. How to amend my 2011 tax return   You must capitalize any expense you pay to improve your rental property. How to amend my 2011 tax return 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. How to amend my 2011 tax return Betterments. How to amend my 2011 tax return   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. How to amend my 2011 tax return Restoration. How to amend my 2011 tax return   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. How to amend my 2011 tax return Adaptation. How to amend my 2011 tax return   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. How to amend my 2011 tax return Separate the costs of repairs and improvements, and keep accurate records. How to amend my 2011 tax return You will need to know the cost of improvements when you sell or depreciate your property. How to amend my 2011 tax return The expenses you capitalize for improving your property can generally be depreciated as if the improvement were separate property. How to amend my 2011 tax return 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. How to amend my 2011 tax return Insurance premiums paid in advance. How to amend my 2011 tax return   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. How to amend my 2011 tax return You cannot deduct the total premium in the year you pay it. How to amend my 2011 tax return Legal and other professional fees. How to amend my 2011 tax return   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. How to amend my 2011 tax return For example, on your 2013 Schedule E, you can deduct fees paid in 2013 to prepare your 2012 Schedule E, Part I. How to amend my 2011 tax return 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. How to amend my 2011 tax return Local benefit taxes. How to amend my 2011 tax return   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. How to amend my 2011 tax return These charges are nondepreciable capital expenditures, and must be added to the basis of your property. How to amend my 2011 tax return However, you can deduct local benefit taxes that are for maintaining, repairing, or paying interest charges for the benefits. How to amend my 2011 tax return Local transportation expenses. How to amend my 2011 tax return    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. How to amend my 2011 tax return 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. How to amend my 2011 tax return See Publication 587, Business Use of Your Home, for information on determining if your home office qualifies as a principal place of business. How to amend my 2011 tax return   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. How to amend my 2011 tax return For 2013, the standard mileage rate for business use is 56. How to amend my 2011 tax return 5 cents per mile. How to amend my 2011 tax return For more information, see chapter 26. How to amend my 2011 tax return    To deduct car expenses under either method, you must keep records that follow the rules in chapter 26. How to amend my 2011 tax return In addition, you must complete Form 4562, Part V, and attach it to your tax return. How to amend my 2011 tax return Rental of equipment. How to amend my 2011 tax return   You can deduct the rent you pay for equipment that you use for rental purposes. How to amend my 2011 tax return However, in some cases, lease contracts are actually purchase contracts. How to amend my 2011 tax return If so, you cannot deduct these payments. How to amend my 2011 tax return You can recover the cost of purchased equipment through depreciation. How to amend my 2011 tax return Rental of property. How to amend my 2011 tax return   You can deduct the rent you pay for property that you use for rental purposes. How to amend my 2011 tax return 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. How to amend my 2011 tax return Travel expenses. How to amend my 2011 tax return   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. How to amend my 2011 tax return You must properly allocate your expenses between rental and nonrental activities. How to amend my 2011 tax return You cannot deduct the cost of traveling away from home if the primary purpose of the trip was to improve your property. How to amend my 2011 tax return You recover the cost of improvements by taking depreciation. How to amend my 2011 tax return For information on travel expenses, see chapter 26. How to amend my 2011 tax return    To deduct travel expenses, you must keep records that follow the rules in chapter 26. How to amend my 2011 tax return   See Rental Expenses in Publication 527 for more information. How to amend my 2011 tax return 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. How to amend my 2011 tax return 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. How to amend my 2011 tax return You cannot deduct depreciation or insurance for the part of the year the property was held for personal use. How to amend my 2011 tax return 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). How to amend my 2011 tax return Example. How to amend my 2011 tax return Your tax year is the calendar year. How to amend my 2011 tax return You moved from your home in May and started renting it out on June 1. How to amend my 2011 tax return You can deduct as rental expenses seven-twelfths of your yearly expenses, such as taxes and insurance. How to amend my 2011 tax return Starting with June, you can deduct as rental expenses the amounts you pay for items generally billed monthly, such as utilities. How to amend my 2011 tax return 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. How to amend my 2011 tax return 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). How to amend my 2011 tax return 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. How to amend my 2011 tax return There is no change in the types of expenses deductible for the personal-use part of your property. How to amend my 2011 tax return Generally, these expenses may be deducted only if you itemize your deductions on Schedule A (Form 1040). How to amend my 2011 tax return You cannot deduct any part of the cost of the first phone line even if your tenants have unlimited use of it. How to amend my 2011 tax return You do not have to divide the expenses that belong only to the rental part of your property. How to amend my 2011 tax return 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. How to amend my 2011 tax return 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. How to amend my 2011 tax return 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. How to amend my 2011 tax return How to divide expenses. How to amend my 2011 tax return   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. How to amend my 2011 tax return You can use any reasonable method for dividing the expense. How to amend my 2011 tax return It may be reasonable to divide the cost of some items (for example, water) based on the number of people using them. How to amend my 2011 tax return 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. How to amend my 2011 tax return 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. How to amend my 2011 tax return 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. How to amend my 2011 tax return 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. How to amend my 2011 tax return Where to report. How to amend my 2011 tax return   Report your not-for-profit rental income on Form 1040, line 21. How to amend my 2011 tax return 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. How to amend my 2011 tax return   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. How to amend my 2011 tax return You can deduct these expenses only if they, together with certain other miscellaneous itemized deductions, total more than 2% of your adjusted gross income. How to amend my 2011 tax return 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. How to amend my 2011 tax return 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. How to amend my 2011 tax return Only your rental expenses may be deducted on Schedule E (Form 1040). How to amend my 2011 tax return Some of your personal expenses may be deductible if you itemize your deductions on Schedule A (Form 1040). How to amend my 2011 tax return You must also determine if the dwelling unit is considered a home. How to amend my 2011 tax return The amount of rental expenses that you can deduct may be limited if the dwelling unit is considered a home. How to amend my 2011 tax return Whether a dwelling unit is considered a home depends on how many days during the year are considered to be days of personal use. How to amend my 2011 tax return 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. How to amend my 2011 tax return Dwelling unit. How to amend my 2011 tax return   A dwelling unit includes a house, apartment, condominium, mobile home, boat, vacation home, or similar property. How to amend my 2011 tax return It also includes all structures or other property belonging to the dwelling unit. How to amend my 2011 tax return A dwelling unit has basic living accommodations, such as sleeping space, a toilet, and cooking facilities. How to amend my 2011 tax return   A dwelling unit does not include property used solely as a hotel, motel, inn, or similar establishment. How to amend my 2011 tax return 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. How to amend my 2011 tax return Example. How to amend my 2011 tax return   You rent a room in your home that is always available for short-term occupancy by paying customers. How to amend my 2011 tax return You do not use the room yourself, and you allow only paying customers to use the room. How to amend my 2011 tax return The room is used solely as a hotel, motel, inn, or similar establishment and is not a dwelling unit. How to amend my 2011 tax return 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. How to amend my 2011 tax return When dividing your expenses, follow these rules. How to amend my 2011 tax return 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. How to amend my 2011 tax return This rule does not apply when determining whether you used the unit as a home. How to amend my 2011 tax return Any day that the unit is available for rent but not actually rented is not a day of rental use. How to amend my 2011 tax return Example. How to amend my 2011 tax return Your beach cottage was available for rent from June 1 through August 31 (92 days). How to amend my 2011 tax return 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. How to amend my 2011 tax return 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. How to amend my 2011 tax return Your family also used the cottage during the last 2 weeks of May (14 days). How to amend my 2011 tax return The cottage was not used at all before May 17 or after August 31. How to amend my 2011 tax return You figure the part of the cottage expenses to treat as rental expenses as follows. How to amend my 2011 tax return The cottage was used for rental a total of 85 days (92 − 7). How to amend my 2011 tax return The days it was available for rent but not rented (7 days) are not days of rental use. How to amend my 2011 tax return The July weekend (2 days) you used it is rental use because you received a fair rental price for the weekend. How to amend my 2011 tax return You used the cottage for personal purposes for 14 days (the last 2 weeks in May). How to amend my 2011 tax return The total use of the cottage was 99 days (14 days personal use + 85 days rental use). How to amend my 2011 tax return Your rental expenses are 85/99 (86%) of the cottage expenses. How to amend my 2011 tax return Note. How to amend my 2011 tax return 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. How to amend my 2011 tax return Therefore, you had 16 days of personal use and 83 days of rental use for this purpose. How to amend my 2011 tax return 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. How to amend my 2011 tax return If you have a net loss, you may not be able to deduct all of the rental expenses. How to amend my 2011 tax return See Dwelling Unit Used as a Home, next. How to amend my 2011 tax return 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. How to amend my 2011 tax return 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. How to amend my 2011 tax return See What is a day of personal use , later. How to amend my 2011 tax return Fair rental price. How to amend my 2011 tax return   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. How to amend my 2011 tax return 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. How to amend my 2011 tax return   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. How to amend my 2011 tax return Instead, count it as a day of personal use in applying both (1) and (2) above. How to amend my 2011 tax return 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. How to amend my 2011 tax return 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). How to amend my 2011 tax return However, see Days used as a main home before or after renting , later. How to amend my 2011 tax return 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. How to amend my 2011 tax return Family includes only your spouse, brothers and sisters, half-brothers and half-sisters, ancestors (parents, grandparents, etc. How to amend my 2011 tax return ), and lineal descendants (children, grandchildren, etc. How to amend my 2011 tax return ). How to amend my 2011 tax return Anyone under an arrangement that lets you use some other dwelling unit. How to amend my 2011 tax return Anyone at less than a fair rental price. How to amend my 2011 tax return Main home. How to amend my 2011 tax return   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. How to amend my 2011 tax return Shared equity financing agreement. How to amend my 2011 tax return   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. How to amend my 2011 tax return Donation of use of property. How to amend my 2011 tax return   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. How to amend my 2011 tax return Examples. How to amend my 2011 tax return   The following examples show how to determine days of personal use. How to amend my 2011 tax return Example 1. How to amend my 2011 tax return You and your neighbor are co-owners of a condominium at the beach. How to amend my 2011 tax return Last year, you rented the unit to vacationers whenever possible. How to amend my 2011 tax return The unit was not used as a main home by anyone. How to amend my 2011 tax return Your neighbor used the unit for 2 weeks last year; you did not use it at all. How to amend my 2011 tax return 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. How to amend my 2011 tax return Example 2. How to amend my 2011 tax return You and your neighbors are co-owners of a house under a shared equity financing agreement. How to amend my 2011 tax return Your neighbors live in the house and pay you a fair rental price. How to amend my 2011 tax return 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. How to amend my 2011 tax return This is because your neighbors rent the house as their main home under a shared equity financing agreement. How to amend my 2011 tax return Example 3. How to amend my 2011 tax return You own a rental property that you rent to your son. How to amend my 2011 tax return Your son does not own any interest in this property. How to amend my 2011 tax return He uses it as his main home and pays you a fair rental price. How to amend my 2011 tax return 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. How to amend my 2011 tax return Example 4. How to amend my 2011 tax return You rent your beach house to Joshua. How to amend my 2011 tax return Joshua rents his cabin in the mountains to you. How to amend my 2011 tax return You each pay a fair rental price. How to amend my 2011 tax return 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. How to amend my 2011 tax return Days used for repairs and maintenance. How to amend my 2011 tax return   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. How to amend my 2011 tax return 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. How to amend my 2011 tax return Days used as a main home before or after renting. How to amend my 2011 tax return   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. How to amend my 2011 tax return Do not count them as days of personal use if: You rented or tried to rent the property for 12 or more consecutive months. How to amend my 2011 tax return 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. How to amend my 2011 tax return However, this special rule does not apply when dividing expenses between rental and personal use. How to amend my 2011 tax return Examples. How to amend my 2011 tax return   The following examples show how to determine whether you used your rental property as a home. How to amend my 2011 tax return Example 1. How to amend my 2011 tax return You converted the basement of your home into an apartment with a bedroom, a bathroom, and a small kitchen. How to amend my 2011 tax return You rented the basement apartment at a fair rental price to college students during the regular school year. How to amend my 2011 tax return You rented to them on a 9-month lease (273 days). How to amend my 2011 tax return You figured 10% of the total days rented to others at a fair rental price is 27 days. How to amend my 2011 tax return During June (30 days), your brothers stayed with you and lived in the basement apartment rent free. How to amend my 2011 tax return Your basement apartment was used as a home because you used it for personal purposes for 30 days. How to amend my 2011 tax return Rent-free use by your brothers is considered personal use. How to amend my 2011 tax return Your personal use (30 days) is more than the greater of 14 days or 10% of the total days it was rented (27 days). How to amend my 2011 tax return Example 2. How to amend my 2011 tax return 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). How to amend my 2011 tax return Your sister-in-law stayed in the room, rent free, for the last 3 weeks (21 days) in July. How to amend my 2011 tax return You figured 10% of the total days rented to others at a fair rental price is 3 days. How to amend my 2011 tax return The room was used as a home because you used it for personal purposes for 21 days. How to amend my 2011 tax return That is more than the greater of 14 days or 10% of the 27 days it was rented (3 days). How to amend my 2011 tax return Example 3. How to amend my 2011 tax return You own a condominium apartment in a resort area. How to amend my 2011 tax return You rented it at a fair rental price for a total of 170 days during the year. How to amend my 2011 tax return 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. How to amend my 2011 tax return Your family actually used the apartment for 10 of those days. How to amend my 2011 tax return Therefore, the apartment is treated as having been rented for 160 (170 − 10) days. How to amend my 2011 tax return You figured 10% of the total days rented to others at a fair rental price is 16 days. How to amend my 2011 tax return Your family also used the apartment for 7 other days during the year. How to amend my 2011 tax return You used the apartment as a home because you used it for personal purposes for 17 days. How to amend my 2011 tax return That is more than the greater of 14 days or 10% of the 160 days it was rented (16 days). How to amend my 2011 tax return Minimal rental use. How to amend my 2011 tax return   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. How to amend my 2011 tax return See Used as a home but rented less than 15 days , later, for more information. How to amend my 2011 tax return Limit on deductions. How to amend my 2011 tax return   Renting a dwelling unit that is considered a home is not a passive activity. How to amend my 2011 tax return 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. How to amend my 2011 tax return 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. How to amend my 2011 tax return Any expenses carried forward to the next year will be subject to any limits that apply for that year. How to amend my 2011 tax return 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. How to amend my 2011 tax return   To figure your deductible rental expenses for this year and any carryover to next year, use Worksheet 9-1. How to amend my 2011 tax return Reporting Income and Deductions Property not used for personal purposes. How to amend my 2011 tax return   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. How to amend my 2011 tax return Property used for personal purposes. How to amend my 2011 tax return   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. How to amend my 2011 tax return Not used as a home. How to amend my 2011 tax return   If you use a dwelling unit for personal purposes, but not as a home, report all the rental income in your income. How to amend my 2011 tax return 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 . How to amend my 2011 tax return The expenses for personal use are not deductible as rental expenses. How to amend my 2011 tax return   Your deductible rental expenses can be more than your gross rental income; however, see Limits on Rental Losses , later. How to amend my 2011 tax return Used as a home but rented less than 15 days. How to amend my 2011 tax return   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). How to amend my 2011 tax return You are not required to report the rental income and rental expenses from this activity. How to amend my 2011 tax return The expenses, including qualified mortgage interest, property taxes, and any qualified casualty loss will be reported as normally allowed on Schedule A (Form 1040). How to amend my 2011 tax return See the Instructions for Schedule A (Form 1040) for more information on deducting these expenses. How to amend my 2011 tax return Used as a home and rented 15 days or more. How to amend my 2011 tax return   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. How to amend my 2011 tax return 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 . How to amend my 2011 tax return The expenses for personal use are not deductible as rental expenses. How to amend my 2011 tax return   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. How to amend my 2011 tax return You do not need to use Worksheet 9-1. How to amend my 2011 tax return   However, if you had a net loss from renting the dwelling unit for the year, your deduction for certain rental expenses is limited. How to amend my 2011 tax return To figure your deductible rental expenses and any carryover to next year, use Worksheet 9-1. How to amend my 2011 tax return Depreciation You recover the cost of income-producing property through yearly tax deductions. How to amend my 2011 tax return You do this by depreciating the property; that is, by deducting some of the cost each year on your tax return. How to amend my 2011 tax return 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. How to amend my 2011 tax return You cannot simply deduct your mortgage or principal payments, or the cost of furniture, fixtures, and equipment, as an expense. How to amend my 2011 tax return You can deduct depreciation only on the part of your property used for rental purposes. How to amend my 2011 tax return Depreciation reduces your basis for figuring gain or loss on a later sale or exchange. How to amend my 2011 tax return You may have to use Form 4562 to figure and report your depreciation. How to amend my 2011 tax return See How To Report Rental Income and Expenses , later. How to amend my 2011 tax return Alternative minimum tax (AMT). How to amend my 2011 tax return    If you use accelerated depreciation, you may be subject to the AMT. How to amend my 2011 tax return 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). How to amend my 2011 tax return Claiming the correct amount of depreciation. How to amend my 2011 tax return   You should claim the correct amount of depreciation each tax year. How to amend my 2011 tax return 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. How to amend my 2011 tax return   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. How to amend my 2011 tax return S Individual Income Tax Return. How to amend my 2011 tax return 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. How to amend my 2011 tax return See Claiming the correct amount of depreciation in chapter 2 of Publication 527 for more information. How to amend my 2011 tax return Changing your accounting method to deduct unclaimed depreciation. How to amend my 2011 tax return   To change your accounting method, you generally must file Form 3115, Application for Change in Accounting Method, to get the consent of the IRS. How to amend my 2011 tax return In some instances, that consent is automatic. How to amend my 2011 tax return For more information, see chapter 1 of Publication 946. How to amend my 2011 tax return Land. How to amend my 2011 tax return   You cannot depreciate the cost of land because land generally does not wear out, become obsolete, or get used up. How to amend my 2011 tax return The costs of clearing, grading, planting, and landscaping are usually all part of the cost of land and cannot be depreciated. How to amend my 2011 tax return More information. How to amend my 2011 tax return   See Publication 527 for more information about depreciating rental property and see Publication 946 for more information about depreciation. How to amend my 2011 tax return 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. How to amend my 2011 tax return You must consider these rules in the order shown below. How to amend my 2011 tax return At-risk rules. How to amend my 2011 tax return These rules are applied first if there is investment in your rental real estate activity for which you are not at risk. How to amend my 2011 tax return This applies only if the real property was placed in service after 1986. How to amend my 2011 tax return Passive activity limits. How to amend my 2011 tax return 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. How to amend my 2011 tax return However, there are exceptions. How to amend my 2011 tax return 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. How to amend my 2011 tax return Losses from holding real property (other than mineral property) placed in service before 1987 are not subject to the at-risk rules. How to amend my 2011 tax return 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. How to amend my 2011 tax return 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. How to amend my 2011 tax return See Publication 925 for more information. How to amend my 2011 tax return Passive Activity Limits In most cases, all rental real estate activities (except those of certain real estate professionals, discussed later) are passive activities. How to amend my 2011 tax return 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. How to amend my 2011 tax return Limits on passive activity deductions and credits. How to amend my 2011 tax return    Deductions or losses from passive activities are limited. How to amend my 2011 tax return You generally cannot offset income, other than passive income, with losses from passive activities. How to amend my 2011 tax return Nor can you offset taxes on income, other than passive income, with credits resulting from passive activities. How to amend my 2011 tax return Any excess loss or credit is carried forward to the next tax year. How to amend my 2011 tax return   For a detailed discussion of these rules, see Publication 925. How to amend my 2011 tax return    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. How to amend my 2011 tax return Real estate professionals. How to amend my 2011 tax return   Rental activities in which you materially participated during the year are not passive activities if, for that year, you were a real estate professional. How to amend my 2011 tax return For a detailed discussion of the requirements, see Publication 527. How to amend my 2011 tax return For a detailed discussion of material participation, see Publication 925. How to amend my 2011 tax return 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. How to amend my 2011 tax return Instead, follow the rules explained in Personal Use of Dwelling Unit (Including Vacation Home), earlier. How to amend my 2011 tax return 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. How to amend my 2011 tax return This special allowance is an exception to the general rule disallowing losses in excess of income from passive activities. How to amend my 2011 tax return 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. How to amend my 2011 tax return Active participation. How to amend my 2011 tax return   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. How to amend my 2011 tax return Management decisions that may count as active participation include approving new tenants, deciding on rental terms, approving expenditures, and similar decisions. How to amend my 2011 tax return Maximum special allowance. How to amend my 2011 tax return   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. How to amend my 2011 tax return   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. How to amend my 2011 tax return 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. How to amend my 2011 tax return   Generally, if your MAGI is $150,000 or more ($75,000 or more if you are married filing separately), there is no special allowance. How to amend my 2011 tax return More information. How to amend my 2011 tax return   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. How to amend my 2011 tax return How To Report Rental Income and Expenses The basic form for reporting residential rental income and expenses is Schedule E (Form 1040). How to amend my 2011 tax return However, do not use that schedule to report a not-for-profit activity. How to amend my 2011 tax return See Not Rented for Profit, earlier. How to amend my 2011 tax return Providing substantial services. How to amend my 2011 tax return   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). How to amend my 2011 tax return Substantial services do not include the furnishing of heat and light, cleaning of public areas, trash collection, etc. How to amend my 2011 tax return For information, see Publication 334, Tax Guide for Small Business. How to amend my 2011 tax return You also may have to pay self-employment tax on your rental income using Schedule SE (Form 1040), Self-Employment Tax. How to amend my 2011 tax return   Use Form 1065, U. How to amend my 2011 tax return S. How to amend my 2011 tax return Return of Partnership Income, if your rental activity is a partnership (including a partnership with your spouse unless it is a qualified joint venture). How to amend my 2011 tax return Qualified joint venture. How to amend my 2011 tax return   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. How to amend my 2011 tax return 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. How to amend my 2011 tax return For more information, see Publication 527. How to amend my 2011 tax return Form 1098, Mortgage Interest Statement. How to amend my 2011 tax return    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. How to amend my 2011 tax return 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. How to amend my 2011 tax return Attach a statement to your return showing the name and address of the other person. How to amend my 2011 tax return In the left margin of Schedule E, next to line 13, enter “See attached. How to amend my 2011 tax return ” Schedule E (Form 1040) If you rent buildings, rooms, or apartments, and provide basic services such as heat and light, trash collection, etc. How to amend my 2011 tax return , you normally report your rental income and expenses on Schedule E, Part I. How to amend my 2011 tax return List your total income, expenses, and depreciation for each rental property. How to amend my 2011 tax return Be sure to enter the number of fair rental and personal use days on line 2. How to amend my 2011 tax return If you have more than three rental or royalty properties, complete and attach as many Schedules E as are needed to list the properties. How to amend my 2011 tax return Complete lines 1 and 2 for each property. How to amend my 2011 tax return However, fill in lines 23a through 26 on only one Schedule E. How to amend my 2011 tax return On Schedule E, page 1, line 18, enter the depreciation you are claiming for each property. How to amend my 2011 tax return To find out if you need to attach Form 4562, see Form 4562, in chapter 3 of Publication 527. How to amend my 2011 tax return If you have a loss from your rental real estate activity, you also may need to complete one or both of the following forms. How to amend my 2011 tax return Form 6198, At-Risk Limitations. How to amend my 2011 tax return See At-Risk Rules , earlier. How to amend my 2011 tax return Also see Publication 925. How to amend my 2011 tax return Form 8582, Passive Activity Loss Limitations. How to amend my 2011 tax return See Passive Activity Limits , earlier. How to amend my 2011 tax return Page 2 of Schedule E is used to report income or loss from partnerships, S corporations, estates, trusts, and real estate mortgage investment conduits. How to amend my 2011 tax return 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. How to amend my 2011 tax return Also, include the amount from line 26 (Part I) in the “Total income or (loss)” on line 41 (Part V). How to amend my 2011 tax return Worksheet 9-1. How to amend my 2011 tax return 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. How to amend my 2011 tax return Did you use the dwelling unit as a home this year? (See Dwelling Unit Used as a Home . How to amend my 2011 tax return ) 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. How to amend my 2011 tax return Rental Use Percentage A. How to amend my 2011 tax return Total days available for rent at fair rental price A. How to amend my 2011 tax return       B. How to amend my 2011 tax return Total days available for rent (line A) but not rented B. How to amend my 2011 tax return       C. How to amend my 2011 tax return Total days of rental use. How to amend my 2011 tax return Subtract line B from line A C. How to amend my 2011 tax return       D. How to amend my 2011 tax return Total days of personal use (including days rented at less than fair rental price) D. How to amend my 2011 tax return       E. How to amend my 2011 tax return Total days of rental and personal use. How to amend my 2011 tax return Add lines C and D E. How to amend my 2011 tax return       F. How to amend my 2011 tax return Percentage of expenses allowed for rental. How to amend my 2011 tax return Divide line C by line E     F. How to amend my 2011 tax return   PART II. How to amend my 2011 tax return Allowable Rental Expenses 1. How to amend my 2011 tax return Enter rents received 1. How to amend my 2011 tax return   2a. How to amend my 2011 tax return Enter the rental portion of deductible home mortgage interest and qualified mortgage insurance premiums (see instructions) 2a. How to amend my 2011 tax return       b. How to amend my 2011 tax return Enter the rental portion of real estate taxes b. How to amend my 2011 tax return       c. How to amend my 2011 tax return Enter the rental portion of deductible casualty and theft losses (see instructions) c. How to amend my 2011 tax return       d. How to amend my 2011 tax return Enter direct rental expenses (see instructions) d. How to amend my 2011 tax return       e. How to amend my 2011 tax return Fully deductible rental expenses. How to amend my 2011 tax return Add lines 2a–2d. How to amend my 2011 tax return Enter here and  on the appropriate lines on Schedule E (see instructions) 2e. How to amend my 2011 tax return   3. How to amend my 2011 tax return Subtract line 2e from line 1. How to amend my 2011 tax return If zero or less, enter -0- 3. How to amend my 2011 tax return   4a. How to amend my 2011 tax return Enter the rental portion of expenses directly related to operating or maintaining  the dwelling unit (such as repairs, insurance, and utilities) 4a. How to amend my 2011 tax return       b. How to amend my 2011 tax return Enter the rental portion of excess mortgage interest and qualified mortgage insurance premiums (see instructions) b. How to amend my 2011 tax return       c. How to amend my 2011 tax return Carryover of operating expenses from 2012 worksheet c. How to amend my 2011 tax return       d. How to amend my 2011 tax return Add lines 4a–4c d. How to amend my 2011 tax return       e. How to amend my 2011 tax return Allowable expenses. How to amend my 2011 tax return Enter the smaller of line 3 or line 4d (see instructions) 4e. How to amend my 2011 tax return   5. How to amend my 2011 tax return Subtract line 4e from line 3. How to amend my 2011 tax return If zero or less, enter -0- 5. How to amend my 2011 tax return   6a. How to amend my 2011 tax return Enter the rental portion of excess casualty and theft losses (see instructions) 6a. How to amend my 2011 tax return       b. How to amend my 2011 tax return Enter the rental portion of depreciation of the dwelling unit b. How to amend my 2011 tax return       c. How to amend my 2011 tax return Carryover of excess casualty losses and depreciation from 2012 worksheet c. How to amend my 2011 tax return       d. How to amend my 2011 tax return Add lines 6a–6c d. How to amend my 2011 tax return       e. How to amend my 2011 tax return Allowable excess casualty and theft losses and depreciation. How to amend my 2011 tax return Enter the smaller of  line 5 or line 6d (see instructions) 6e. How to amend my 2011 tax return   PART III. How to amend my 2011 tax return Carryover of Unallowed Expenses to Next Year 7a. How to amend my 2011 tax return Operating expenses to be carried over to next year. How to amend my 2011 tax return Subtract line 4e from line 4d 7a. How to amend my 2011 tax return   b. How to amend my 2011 tax return Excess casualty and theft losses and depreciation to be carried over to next year. How to amend my 2011 tax return  Subtract line 6e from line 6d b. How to amend my 2011 tax return   Worksheet 9-1 Instructions. How to amend my 2011 tax return Worksheet for Figuring Rental Deductions for a Dwelling Unit Used as a Home Caution. How to amend my 2011 tax return 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. How to amend my 2011 tax return Line 2a. How to amend my 2011 tax return Figure the mortgage interest on the dwelling unit that you could deduct on Schedule A as if you had not rented the unit. How to amend my 2011 tax return Do not include interest on a loan that did not benefit the dwelling unit. How to amend my 2011 tax return 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. How to amend my 2011 tax return Include interest on a loan used to buy, build, or improve the dwelling unit, or to refinance such a loan. How to amend my 2011 tax return Include the rental portion of this interest in the total you enter on line 2a of the worksheet. How to amend my 2011 tax return   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. How to amend my 2011 tax return See the Schedule A instructions. How to amend my 2011 tax return However, figure your adjusted gross income (Form 1040, line 38) without your rental income and expenses from the dwelling unit. How to amend my 2011 tax return See Line 4b to deduct the part of the qualified mortgage insurance premiums not allowed because of the adjusted gross income limit. How to amend my 2011 tax return Include the rental portion of the amount from Schedule A, line 13, in the total you enter on line 2a of the worksheet. How to amend my 2011 tax return   Note. How to amend my 2011 tax return Do not file this Schedule A or use it to figure the amount to deduct on line 13 of that schedule. How to amend my 2011 tax return Instead, figure the personal portion on a separate Schedule A. How to amend my 2011 tax return 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. How to amend my 2011 tax return           Line 2c. How to amend my 2011 tax return 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. How to amend my 2011 tax return To do this, complete Section A of Form 4684, Casualties and Thefts, treating the losses as personal losses. How to amend my 2011 tax return If any of the loss is due to a federally declared disaster, see the Instructions for Form 4684. How to amend my 2011 tax return On Form 4684, line 17, enter 10% of your adjusted gross income figured without your rental income and expenses from the dwelling unit. How to amend my 2011 tax return Enter the rental portion of the result from Form 4684, line 18, on line 2c of this worksheet. How to amend my 2011 tax return   Note. How to amend my 2011 tax return Do not file this Form 4684 or use it to figure your personal losses on Schedule A. How to amend my 2011 tax return Instead, figure the personal portion on a separate Form 4684. How to amend my 2011 tax return           Line 2d. How to amend my 2011 tax return Enter the total of your rental expenses that are directly related only to the rental activity. How to amend my 2011 tax return These include interest on loans used for rental activities other than to buy, build, or improve the dwelling unit. How to amend my 2011 tax return Also include rental agency fees, advertising, office supplies, and depreciation on office equipment used in your rental activity. How to amend my 2011 tax return           Line 2e. How to amend my 2011 tax return 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. How to amend my 2011 tax return Enter the amounts on lines 2a, 2b, 2c, and 2d on the appropriate lines of Schedule E. How to amend my 2011 tax return           Line 4b. How to amend my 2011 tax return 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. How to amend my 2011 tax return 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. How to amend my 2011 tax return Do not include interest on a loan that did not benefit the dwelling unit (as explained in the line 2a instructions). How to amend my 2011 tax return           Line 4e. How to amend my 2011 tax return 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. How to amend my 2011 tax return *           Line 6a. How to amend my 2011 tax return To find the rental portion of excess casualty and theft losses, use the Form 4684 you prepared for line 2c of this worksheet. How to amend my 2011 tax return   A. How to amend my 2011 tax return Enter the amount from Form 4684, line 10       B. How to amend my 2011 tax return Enter the rental portion of line A       C. How to amend my 2011 tax return Enter the amount from line 2c of this worksheet       D. How to amend my 2011 tax return Subtract line C from line B. How to amend my 2011 tax return Enter the result here and on line 6a of this worksheet               Line 6e. How to amend my 2011 tax return 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. How to amend my 2011 tax return * *Allocating the limited deduction. How to amend my 2011 tax return 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. How to amend my 2011 tax return Enter the amount you allocate to each expense on the appropriate line of Schedule E, Part I. How to amend my 2011 tax return Prev  Up  Next   Home   More Online Publications
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The How To Amend My 2011 Tax Return

How to amend my 2011 tax return 3. How to amend my 2011 tax return   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). How to amend my 2011 tax return 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. How to amend my 2011 tax return There are also the limitations which may need to be applied if you have a net loss on Schedule E. How to amend my 2011 tax return 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. How to amend my 2011 tax return You may also have a gain or loss related to your rental property from a casualty or theft. How to amend my 2011 tax return This is considered separately from the income and expense information you report on Schedule E. How to amend my 2011 tax return Which Forms To Use The basic form for reporting residential rental income and expenses is Schedule E (Form 1040). How to amend my 2011 tax return However, do not use that schedule to report a not-for-profit activity. How to amend my 2011 tax return See Not Rented for Profit , in chapter 4. How to amend my 2011 tax return There are also other rental situations in which forms other than Schedule E would be used. How to amend my 2011 tax return Schedule E (Form 1040) If you rent buildings, rooms, or apartments, and provide basic services such as heat and light, trash collection, etc. How to amend my 2011 tax return , you normally report your rental income and expenses on Schedule E, Part I. How to amend my 2011 tax return List your total income, expenses, and depreciation for each rental property. How to amend my 2011 tax return Be sure to enter the number of fair rental and personal use days on line 2. How to amend my 2011 tax return If you have more than three rental or royalty properties, complete and attach as many Schedules E as are needed to list the properties. How to amend my 2011 tax return Complete lines 1 and 2 for each property. How to amend my 2011 tax return However, fill in lines 23a through 26 on only one Schedule E. How to amend my 2011 tax return On Schedule E, page 1, line 18, enter the depreciation you are claiming for each property. How to amend my 2011 tax return To find out if you need to attach Form 4562, see Form 4562 , later. How to amend my 2011 tax return If you have a loss from your rental real estate activity, you also may need to complete one or both of the following forms. How to amend my 2011 tax return Form 6198, At-Risk Limitations. How to amend my 2011 tax return See At-Risk Rules , later. How to amend my 2011 tax return Also see Publication 925. How to amend my 2011 tax return Form 8582, Passive Activity Loss Limitations. How to amend my 2011 tax return See Passive Activity Limits , later. How to amend my 2011 tax return Page 2 of Schedule E is used to report income or loss from partnerships, S corporations, estates, trusts, and real estate mortgage investment conduits. How to amend my 2011 tax return 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. How to amend my 2011 tax return Also, include the amount from line 26 (Part I) in the “Total income or (loss)” on line 41 (Part V). How to amend my 2011 tax return Form 4562. How to amend my 2011 tax return   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. How to amend my 2011 tax return Otherwise, figure your depreciation on your own worksheet. How to amend my 2011 tax return You do not have to attach these computations to your return, but you should keep them in your records for future reference. How to amend my 2011 tax return   See Publication 946 for information on preparing Form 4562. How to amend my 2011 tax return 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. How to amend my 2011 tax return Providing substantial services. How to amend my 2011 tax return   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. How to amend my 2011 tax return Use Form 1065, U. How to amend my 2011 tax return S. How to amend my 2011 tax return Return of Partnership Income, if your rental activity is a partnership (including a partnership with your spouse unless it is a qualified joint venture). How to amend my 2011 tax return Substantial services do not include the furnishing of heat and light, cleaning of public areas, trash collection, etc. How to amend my 2011 tax return For information, see Publication 334, Tax Guide for Small Business. How to amend my 2011 tax return Also, you may have to pay self-employment tax on your rental income using Schedule SE (Form 1040), Self-Employment Tax. How to amend my 2011 tax return For a discussion of “substantial services,” see Real Estate Rents in Publication 334, chapter 5. How to amend my 2011 tax return 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. How to amend my 2011 tax return 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. How to amend my 2011 tax return If you make this election, you must report rental real estate income on Schedule E (or Schedule C if you provide substantial services). How to amend my 2011 tax return You will not be required to file Form 1065 for any year the election is in effect. How to amend my 2011 tax return 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. How to amend my 2011 tax return 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. How to amend my 2011 tax return For more information on qualified joint ventures, go to IRS. How to amend my 2011 tax return gov and enter “qualified joint venture” in the search box. How to amend my 2011 tax return 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. How to amend my 2011 tax return You must consider these rules in the order shown below. How to amend my 2011 tax return Both are discussed in this section. How to amend my 2011 tax return At-risk rules. How to amend my 2011 tax return These rules are applied first if there is investment in your rental real estate activity for which you are not at risk. How to amend my 2011 tax return This applies only if the real property was placed in service after 1986. How to amend my 2011 tax return Passive activity limits. How to amend my 2011 tax return 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. How to amend my 2011 tax return However, there are exceptions. How to amend my 2011 tax return 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. How to amend my 2011 tax return Losses from holding real property (other than mineral property) placed in service before 1987 are not subject to the at-risk rules. How to amend my 2011 tax return 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. How to amend my 2011 tax return 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. How to amend my 2011 tax return 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. How to amend my 2011 tax return See Publication 925 for a discussion of the at-risk rules. How to amend my 2011 tax return Form 6198. How to amend my 2011 tax return   If you are subject to the at-risk rules, file Form 6198, At-Risk Limitations, with your tax return. How to amend my 2011 tax return Passive Activity Limits In most cases, all rental real estate activities (except those of certain real estate professionals, discussed later) are passive activities. How to amend my 2011 tax return 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. How to amend my 2011 tax return For a discussion of activities that are not considered rental activities, see Rental Activities in Publication 925. How to amend my 2011 tax return Deductions or losses from passive activities are limited. How to amend my 2011 tax return You generally cannot offset income, other than passive income, with losses from passive activities. How to amend my 2011 tax return Nor can you offset taxes on income, other than passive income, with credits resulting from passive activities. How to amend my 2011 tax return Any excess loss or credit is carried forward to the next tax year. How to amend my 2011 tax return 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. How to amend my 2011 tax return For a detailed discussion of these rules, see Publication 925. How to amend my 2011 tax return Real estate professionals. How to amend my 2011 tax return   If you are a real estate professional, complete line 43 of Schedule E. How to amend my 2011 tax return      You qualify as a real estate professional for the tax year if you meet both of the following requirements. How to amend my 2011 tax return 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. How to amend my 2011 tax return You perform more than 750 hours of services during the tax year in real property trades or businesses in which you materially participate. How to amend my 2011 tax return If you qualify as a real estate professional, rental real estate activities in which you materially participated are not passive activities. How to amend my 2011 tax return 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. How to amend my 2011 tax return   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. How to amend my 2011 tax return 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. How to amend my 2011 tax return   Do not count your spouse's personal services to determine whether you met the requirements listed earlier to qualify as a real estate professional. How to amend my 2011 tax return However, you can count your spouse's participation in an activity in determining if you materially participated. How to amend my 2011 tax return Real property trades or businesses. How to amend my 2011 tax return   A real property trade or business is a trade or business that does any of the following with real property. How to amend my 2011 tax return Develops or redevelops it. How to amend my 2011 tax return Constructs or reconstructs it. How to amend my 2011 tax return Acquires it. How to amend my 2011 tax return Converts it. How to amend my 2011 tax return Rents or leases it. How to amend my 2011 tax return Operates or manages it. How to amend my 2011 tax return Brokers it. How to amend my 2011 tax return Choice to treat all interests as one activity. How to amend my 2011 tax return   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. How to amend my 2011 tax return You can make this choice for any year that you qualify as a real estate professional. How to amend my 2011 tax return If you forgo making the choice for one year, you can still make it for a later year. How to amend my 2011 tax return   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. How to amend my 2011 tax return This is true even if you are not a real estate professional in any intervening year. How to amend my 2011 tax return (For that year, the exception for real estate professionals will not apply in determining whether your activity is subject to the passive activity rules. How to amend my 2011 tax return )   See the Instructions for Schedule E for information about making this choice. How to amend my 2011 tax return Material participation. How to amend my 2011 tax return   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. How to amend my 2011 tax return For details, see Publication 925 or the Instructions for Schedule C. How to amend my 2011 tax return Participating spouse. How to amend my 2011 tax return   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. How to amend my 2011 tax return Do this even if your spouse owns no interest in the activity or files a separate return for the year. How to amend my 2011 tax return Form 8582. How to amend my 2011 tax return    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. How to amend my 2011 tax return See Form 8582 not required , later in this chapter, to determine if you must complete Form 8582. How to amend my 2011 tax return   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. How to amend my 2011 tax return 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. How to amend my 2011 tax return Instead, follow the rules explained in chapter 5, Personal Use of Dwelling Unit (Including Vacation Home). How to amend my 2011 tax return 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. How to amend my 2011 tax return This special allowance is an exception to the general rule disallowing losses in excess of income from passive activities. How to amend my 2011 tax return 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. How to amend my 2011 tax return Example. How to amend my 2011 tax return 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. How to amend my 2011 tax return $2,000 of Jane's $3,500 loss offsets her passive income. How to amend my 2011 tax return The remaining $1,500 loss can be deducted from her $40,000 wages. How to amend my 2011 tax return 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. How to amend my 2011 tax return Active participation. How to amend my 2011 tax return   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. How to amend my 2011 tax return Management decisions that may count as active participation include approving new tenants, deciding on rental terms, approving expenditures, and other similar decisions. How to amend my 2011 tax return Example. How to amend my 2011 tax return 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. How to amend my 2011 tax return Mike had advertised and rented the house to the current tenant himself. How to amend my 2011 tax return He also collected the rents, which usually came by mail. How to amend my 2011 tax return All repairs were either made or contracted out by Mike. How to amend my 2011 tax return 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. How to amend my 2011 tax return Maximum special allowance. How to amend my 2011 tax return   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. How to amend my 2011 tax return   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. How to amend my 2011 tax return 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. How to amend my 2011 tax return   Generally, if your MAGI is $150,000 or more ($75,000 or more if you are married filing separately), there is no special allowance. How to amend my 2011 tax return Modified adjusted gross income (MAGI). How to amend my 2011 tax return   This is your adjusted gross income from Form 1040, U. How to amend my 2011 tax return S. How to amend my 2011 tax return Individual Income Tax Return, line 38, or Form 1040NR, U. How to amend my 2011 tax return S. How to amend my 2011 tax return 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. How to amend my 2011 tax return S. How to amend my 2011 tax return 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). How to amend my 2011 tax return Form 8582 not required. How to amend my 2011 tax return   Do not complete Form 8582 if you meet all of the following conditions. How to amend my 2011 tax return Your only passive activities were rental real estate activities in which you actively participated. How to amend my 2011 tax return 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). How to amend my 2011 tax return If married filing separately, you lived apart from your spouse all year. How to amend my 2011 tax return You have no prior year unallowed losses from these (or any other passive) activities. How to amend my 2011 tax return You have no current or prior year unallowed credits from passive activities. How to amend my 2011 tax return Your MAGI is $100,000 or less ($50,000 or less if married filing separately and you lived apart from your spouse all year). How to amend my 2011 tax return 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. How to amend my 2011 tax return   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. How to amend my 2011 tax return On lines 23a through 23e of your Schedule E, enter the applicable amounts. How to amend my 2011 tax return Casualties and Thefts As a result of a casualty or theft, you may have a loss related to your rental property. How to amend my 2011 tax return You may be able to deduct the loss on your income tax return. How to amend my 2011 tax return Casualty. How to amend my 2011 tax return   This is the damage, destruction, or loss of property resulting from an identifiable event that is sudden, unexpected, or unusual. How to amend my 2011 tax return Such events include a storm, fire, or earthquake. How to amend my 2011 tax return Theft. How to amend my 2011 tax return   This is defined as the unlawful taking and removing of your money or property with the intent to deprive you of it. How to amend my 2011 tax return Gain from casualty or theft. How to amend my 2011 tax return   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. How to amend my 2011 tax return Generally, you must report this gain. How to amend my 2011 tax return However, under certain circumstances, you may defer paying tax by choosing to postpone reporting the gain. How to amend my 2011 tax return 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. How to amend my 2011 tax return In certain circumstances, the replacement period can be greater than 2 years; see Replacement Period in Publication 547 for more information. How to amend my 2011 tax return The cost of the replacement property must be equal to or more than the net insurance or other payment you received. How to amend my 2011 tax return More information. How to amend my 2011 tax return   For information on business and nonbusiness casualty and theft losses, see Publication 547. How to amend my 2011 tax return How to report. How to amend my 2011 tax return    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. How to amend my 2011 tax return Follow the Instructions for Form 4684 for where to carry your net gain or loss. How to amend my 2011 tax return 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. How to amend my 2011 tax return In 2013, she rented it all 12 months for a monthly rental fee of $1,125. How to amend my 2011 tax return In addition to her rental income of $13,500 (12 x $1,125), Marie had the following expenses. How to amend my 2011 tax return 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. How to amend my 2011 tax return This means using the straight line method over a recovery period of 27. How to amend my 2011 tax return 5 years. How to amend my 2011 tax return She uses Table 2-2d to find her depreciation percentage. How to amend my 2011 tax return Because she placed the property in service in February 2008, she continues to use that row of Table 2-2d. How to amend my 2011 tax return For year 6, the rate is 3. How to amend my 2011 tax return 636%. How to amend my 2011 tax return 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. How to amend my 2011 tax return 636%) 4,363 Net rental (loss) for house ($213)       Marie had a net loss for the year. How to amend my 2011 tax return 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. How to amend my 2011 tax return Marie also meets all of the requirements for not having to file Form 8582. How to amend my 2011 tax return She uses Schedule E, Part I, to report her rental income and expenses. How to amend my 2011 tax return She enters her income, expenses, and depreciation for the house in the column for Property A and enters her loss on line 22. How to amend my 2011 tax return Form 4562 is not required. How to amend my 2011 tax return Prev  Up  Next   Home   More Online Publications