Required Tax Documents Concerning Reporting Rental Property Activity

For a property owner, to completely account for and report your rental property earnings to the IRS, you’ll need various IRS tax forms which will be specified within this article. As outlined here, the tax documents required change according to the kind of official company who possesses the property (individual, partnership, corporation, or LLC). For further information regarding legal entity rental property ownership, look at the article included in this Guide, titled Best Rental Property Ownership.

Quick Note: You can find the different documents mentioned just below on the Internal Revenue Service’s homepage: http://www.irs.gov/Forms-&-Pubs. When you’re using tax prep software applications, the software will have the required documents.

Individual Ownership

This includes mutual ownership with a wife or husband, tenancy in common, or mutual tenancy with right of survivorship.

Form 1040. All individual people will need to use Form 1040, so this is the place you’ve got to get started. Your annual total rental property earnings or deficit subjected to tax will be found on line 17 in the first page of the Form 1040. Take note that as a landlord with leasing activity, you will not be able to take advantage of the shortened Forms 1040A or 1040-EZ.

Schedule E. Schedule E is one addendum of Form 1040. It actually has a variety of applications, yet the application that is related to your needs is reporting of rental property revenue and expenses. The one section of Schedule E that you must finish is the portion entitled “Part I”. There are a few relevant tips that you should keep in mind, which include: while reporting on a rental that you jointly own with anyone, other than your wife or husband, you only need to report the expenditures which you sustained and the profit you acquired. On top of that, do not forget that if you leased just for a portion of the entire year, or you are leasing a portion of your home, you will need to distribute costs relating to rental and non-rental purposes. For more information, take a look at Tax Deductible Rental Property Expenses, the article set that is included inside this Guide.

Form 4562. On line 18 of Schedule E, you’ll deduct the depreciation for your property, that you will employ Form 4562 to figure out. To get more tips, find the article entitled, Depreciation Expenses for Rental Property, which is included in this Guide.

Partnership/Corporate Ownership

For example a general or limited partnership, or S corporation.

Form 1065/1120-S. For people with a collaboration, you will need to use Form 1065, the form a partnership utilizes to report all of its business operations. An S corporation uses Form 1120-S to report its enterprise activities. Schedule K, line 2 of Form 1065 or 1120-S is where your net rental losses or revenue are reported (Schedule K is embedded inside those documents).

Form 8825. Form 8825 is made for partnerships and S corporations, yet functions just like Schedule E. It’s in essence a lot like Schedule E. Make certain that all profit and operating costs suffered by the corporation or partnership are included in their total amounts (these are going to be divided among each business partner or investor down the road).

Schedule K-1. This document reports the net leasing income or losses due to each partner or investor according to that business partner or shareholder’s ownership interest. Each partner gets her / his very own K-1 and should report the contents of that K-1 on his or her Form 1040, Schedule E, Part II.

Limited Liability Co-ownership

You may file like you’re an independent property owner as, for taxation requirements, a single-member LLC is actually a disregarded entity (look above). A multiple-member LLC has the option to be taxed either as a partnership or as an S corporation (see above).

Kent CPA+John Huddleston has written extensively on tax related subjects of interest to small business owners. He is a graduate of Washington State University and the University of Washington School of Law.

Kirkland CPAAbout Kirkland CPA
Kirkland CPA+John Huddleston has written extensively on tax related subjects of interest to small business owners. He is a graduate of Washington State University and the University of Washington School of Law.

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