Schedule E Tax Form for
Residential Landlords

For a residential landlord, the Schedule E tax form is used to report to the IRS the rental income and expense data for up to three individual rental properties. In this manner, Schedule E, the tax form that's titled "Supplemental Income and Loss", is used to show whether or not a rental property is producing a profit or a (loss) for income tax purposes.

Schedule E is therefore one of the main federal tax forms used by all residential landlords. Let's take a look at the major portions of "Part 1" of the form that addresses rental real estate operations…

At the top of the form (line 1), the descriptions and addresses for up to three separate rental properties (A, B, and C) can be entered. To the right of that (line 2) are questions to determine if any of the properties were used for personal use for certain time spans.

Lines 3 and 4 make up the income portion of the Schedule E tax form. Rents and royalties received for each property are entered in their respective columns and then added in the far right "totals" column.

The various expenses of the properties are entered in lines 5 through 18. The expenses for each separate property are totaled on line 19. The total expenses of each separate property are added and then entered on the far right "totals" column of line 19.

Line 20 is where the depreciation expense for each separate property is entered. These expenses are then combined and entered in the far right column of line 20.

On line 21, the expenses for each property (lines 19 and 20) are then added to arrive at the total expenses for each separate property. There is no far right "totals" column for this line.

Line 22 is where the income or loss is entered for each separate property. This is found by subtracting the line 21 expense from the line 3 or line 4 income or royalties for each property. Certain rules apply to losses and Form 6198 may have to be filed.

For line 23, the "deductible" portions of any line 22 rental real estate losses are entered for each property. Certain rules apply which may limit the amount of loss that a property may show for tax purposes. Form 8582 may have to be filed.

On line 24, only positive amounts (income) are entered for properties that produce a profit from line 22. These positive amounts are then totaled in the far right column of line 24.

Line 25 provides the total losses of all rental real estate and royalty properties. This is found by adding the royalty losses of line 22 and the line 23 real estate losses. The total of these losses is then entered in the far right column of line 25.

Finally, the total of rental real estate and royalty income or loss for the Schedule E tax form is found by adding lines 24 and 25. The result is then entered in the far right column of line 26. It is also entered on line 17 of Form 1040 and is used for determining your "total income".

And that's the nuts-and-bolts of how the Schedule E tax form is used. A loss from Schedule E will reduce your total income (and tax liability), whereas a positive result (income) from the form will increase your total income and tax liability.

Please note: The above information on the Schedule E tax form is general in nature and should not be considered tax or accounting advice. It should not be relied upon for your own particular circumstances. For tax advice, please consult the services of a qualified accountant or tax attorney.

For more in-depth information on the Schedule E tax form, please visit The Landlord's Library book collection. It's a practical "one-stop" resource for helping you pave the path to your landlording success.

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