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How to File Schedule E: Complete 2025 Guide for Landlords

Filing Schedule E doesn't have to be complicated. This step-by-step guide covers everything you need to report rental income, claim deductions, and avoid IRS red flags.

Expense Categories

27.5

Years Depreciation

$25K

Loss Limit

What is Schedule E?

IRS Schedule E (Form 1040) reports income or loss from rental real estate, royalties, partnerships, S corporations, estates, and trusts. For landlords, Part I is where you report rental property income and expenses.

Every landlord with rental income must file Schedule E, regardless of whether you made a profit or loss. The form calculates your net rental income (or loss) that transfers to your main Form 1040.

Key Schedule E Lines Explained

Line	Field Name	What to Enter
1a	Physical Address	Street address of each rental property
1b	Property Type	Type code (1-Single Family, 2-Multi Family, etc.)
2	Fair Rental Days	Days property was rented at fair market rate
3	Rents Received	Total rental income collected
5-19	Expenses	Deductible expenses by category
20	Total Expenses	Sum of all expense categories
21	Income or Loss	Line 3 minus Line 20

Complete Deductions Checklist

Don't miss these common Schedule E deductions. The average landlord deducts $12,000-25,000 annually.

Advertising

$50-200

Zillow listings, yard signs, photos

Auto & Travel

$200-800

Mileage to property, parking

Cleaning & Maintenance

$500-2,000

Cleaning between tenants, lawn care

Insurance

$800-2,000

Landlord policy, umbrella coverage

Legal & Professional

$300-1,500

CPA fees, attorney, evictions

Management Fees

$1,000-3,000

Property manager (8-10% of rent)

Mortgage Interest

$3,000-15,000

Interest portion of loan payments

Repairs

$500-3,000

Plumbing, HVAC, appliances

Supplies

$100-500

Light bulbs, filters, small tools

Taxes

$2,000-8,000

Property tax, NOT income tax

Utilities

$500-2,000

Paid by landlord (water, trash)

Depreciation

$3,000-15,000

Building value / 27.5 years

Step-by-Step Filing Process

Gather Your Records

Collect all rental income records (rent payments, security deposits kept) and expense receipts (repairs, insurance, property tax statements, mortgage interest Form 1098).

Tip: LandlordTax automatically categorizes transactions and generates Schedule E reports.

Calculate Depreciation

Determine your building's depreciable basis (purchase price minus land value) and divide by 27.5. First-year depreciation is prorated based on the month placed in service.

Example: $250,000 property (20% land) = $200,000 building ÷ 27.5 = $7,273/year

Fill Out Part I

Enter property addresses (1a), type codes (1b), rental days (2), income (3), and expenses by category (5-19). Each property gets its own column (up to 3 per Schedule E; use additional forms for more).

Check Passive Loss Rules

If you have a loss, determine if you can deduct it this year. Active participants with AGI below $100,000 can deduct up to $25,000. Otherwise, losses carry forward.

Transfer to Form 1040

The total from Schedule E Line 26 transfers to Schedule 1, Line 5, and then to Form 1040. Keep Schedule E with your tax return records.

5 Common Schedule E Mistakes to Avoid

1. Missing Depreciation

Depreciation is often the largest deduction ($5,000-15,000/year). Many DIY filers forget it. You must claim it even if you don't want to - the IRS assumes you did when you sell.

2. Mixing Repairs and Improvements

A new roof is an improvement (depreciated), not a repair (fully deductible). Misclassifying can trigger audits. When in doubt, ask your CPA.

3. Forgetting Mileage

Trips to collect rent, inspect property, or meet contractors are deductible (67¢/mile in 2024). Keep a mileage log or use an app to track.

4. Not Filing 1099s

If you pay any contractor $600+ (property manager, plumber, electrician), you must file 1099-NEC. Penalties are $50-270 per missing form.

5. Poor Record Keeping

The IRS can audit up to 3 years back (6 for major errors). Keep receipts, bank statements, and mileage logs for at least 7 years.

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Auto-categorize bank & credit card transactions
Calculate depreciation automatically
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Frequently Asked Questions

When is Schedule E due?

Schedule E is filed with your Form 1040, due April 15 (or October 15 with extension). If you have rental income, you must file Schedule E - there's no minimum threshold.

Can I file Schedule E myself or need a CPA?

Many landlords file Schedule E themselves using tax software. However, if you have complex situations (multiple properties, passive loss limitations, cost segregation), a CPA can help maximize deductions and avoid errors.

What's the difference between repairs and improvements?

Repairs (painting, fixing leaks) are fully deductible in the current year. Improvements (new roof, HVAC replacement) must be depreciated over time. The distinction can save or cost you thousands.

How do I calculate depreciation for Schedule E?

Residential rental property is depreciated over 27.5 years. Divide your building value (not land) by 27.5 to get annual depreciation. Example: $200,000 building ÷ 27.5 = $7,273/year deduction.

What if my rental shows a loss on Schedule E?

Rental losses up to $25,000 can offset other income if your AGI is below $100,000 (phases out up to $150,000). Excess losses carry forward. This is called the passive activity loss rule.

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