How to Fill Out a Schedule E Form for Rental Property

To fill out Schedule E for a rental property, you complete Part I of the form: enter the property’s address and type, the number of days it was rented at fair market value and used personally, gross rental income on line 3, deductible expenses on lines 5 through 19 (including depreciation on line 18), and the net income or loss at the bottom. You then attach Schedule E to your Form 1040, and the total flows to Schedule 1, line 5.¹ The form itself is short. What makes it tricky is depreciation and the loss rules that decide whether the number at the bottom actually reduces your tax bill.

What to Gather Before You Start

Pull together your records first. You’ll want any Forms 1099 showing rental payments you received, receipts and statements for every expense you plan to deduct, closing documents from when you bought the property, and last year’s return so your depreciation figures stay consistent. If a property manager handled the rentals, their year-end statement usually has the income and most expense categories broken out the way Schedule E asks for them.

Filling In Part I Line by Line

Property Address and Type

At the top of Part I, enter the street address, city, state, and ZIP code for each rental property. Next to each address, pick the property type code from the list in the instructions: single-family residence, multi-family residence, vacation or short-term rental, commercial, land, self-rental, royalties, or other.² The form gives you space for up to three properties (columns A, B, and C). If you own more than three, attach additional copies of Schedule E and complete a property block for each one.

Fair Rental Days and Personal Use Days

Directly below the address, you report two numbers for each property: days rented at fair market value, and days of personal use. These aren’t just informational. The ratio decides whether the IRS treats the property as a pure rental, a mixed-use property, or a personal residence, and each classification changes what you can deduct. A personal use day includes any day the property was used by you, a family member, someone paying below fair market rent, or someone using it under a swap arrangement.³ More on the thresholds below.

Income: Lines 3 and 4

Line 3 is gross rents received during the year. Include every dollar the tenant paid you, plus advance rent, and any security deposit you kept because the tenant broke the lease or damaged the property. Line 4 is for royalties from oil, gas, mineral properties, copyrights, patents, or name-image-likeness licensing.² Most landlords leave line 4 blank.

Expenses: Lines 5 Through 19

Lines 5 through 19 are your itemized deductions for the rental. Federal law allows you to deduct the ordinary and necessary costs of producing rental income.⁴ Schedule E gives you a labeled line for each of the common categories:

Line 5: advertising
Line 6: auto and travel
Line 7: cleaning and maintenance
Line 8: commissions
Line 9: insurance
Line 10: legal and professional fees
Line 11: management fees
Line 12: mortgage interest paid to banks
Line 13: other interest
Line 14: repairs
Line 15: supplies
Line 16: taxes (including property tax)
Line 17: utilities
Line 18: depreciation or depletion
Line 19: other, with a description

Every expense has to connect to the rental activity, not to your personal use of the property.⁵ If you use a property for both rental and personal purposes, split shared costs like insurance and utilities based on the ratio of rental days to total use days, and only deduct the rental portion.

Totals and Net Result

Line 20 is the sum of your expenses. Line 21 subtracts total expenses from total rents and royalties to give you the income or loss for that property. Line 22 handles any deductible rental loss after applying the at-risk and passive activity limits (covered below). Lines 23a through 26 are the summary block: totals for rents received, royalties received, mortgage interest, depreciation, and total expenses across all your properties, followed by the combined income or loss that carries to Schedule 1.

Depreciation on Line 18

Depreciation is usually the single largest deduction on a rental property, and line 18 is where it lands. The IRS lets you recover the cost of the building (not the land underneath it) over a fixed recovery period using the straight-line method: 27.5 years for residential rental property and 39 years for commercial property.⁶ You compute the number on Form 4562 and transfer it to Schedule E.

The clock starts when the property is placed in service for rental use. Do not skip it. If you fail to claim depreciation in a given year, the IRS still reduces your property’s tax basis by the amount you were allowed to deduct, so when you sell, you owe depreciation recapture tax of up to 25% on those amounts whether you took the deduction or not.⁷

Personal property you place inside the unit (appliances, carpeting, window treatments) has its own faster recovery treatment through Section 179 expensing or bonus depreciation, both computed on Form 4562. The One Big Beautiful Bill Act restored 100% bonus depreciation for qualified property acquired after January 19, 2025.⁸ Neither Section 179 nor bonus depreciation applies to the residential building itself.

Personal Use Days: The 14-Day and 10% Rules

Two thresholds decide what happens to your deductions when you use the property yourself.

If you rent the property for fewer than 15 days during the year, you don’t report the rental income at all and can’t deduct rental expenses.³ Schedule E doesn’t come into play for that property.

If you use the property personally for more than the greater of 14 days or 10% of the days it’s rented at fair market value, the IRS treats it as a personal residence. You still file Schedule E, but your rental deductions are limited and generally can’t exceed the rental income from that property.

Below those personal use limits, the property is a rental. You still split shared expenses between rental and personal days if there was any personal use, and only the rental share goes on Schedule E.

Whether Your Loss Actually Reduces Your Tax

If line 21 shows a loss, you can’t necessarily deduct it in full this year. Two sets of rules cut in before the loss reaches your Form 1040.

At-Risk Rules

You can only deduct losses up to the amount you have “at risk” in the activity: cash invested, the adjusted basis of property you contributed, and amounts you borrowed for which you’re personally liable. Nonrecourse loans and amounts protected by guarantees generally don’t count.⁹ Real estate gets an important carve-out: qualified nonrecourse financing secured by real property used in the rental does count toward your at-risk amount, which is what makes standard mortgages work here. Losses beyond your at-risk amount are computed on Form 6198 and carry forward.

Passive Activity Rules and the $25,000 Allowance

Rental real estate is almost always a passive activity, and passive losses generally can only offset passive income. You cannot use a rental loss to reduce tax on your salary or freelance earnings.¹⁰

The main exception for landlords is the active participation allowance. If you actively participate in managing the property (approving tenants, setting rental terms, authorizing repairs) and own at least 10%, you can deduct up to $25,000 of rental losses against non-passive income.¹¹ The allowance shrinks by 50 cents for every dollar your modified adjusted gross income exceeds $100,000, and disappears entirely at $150,000. Any disallowed loss carries forward to future years, where it can offset passive income or be released when you sell. You compute the allowance on Form 8582 and attach it to your return.

The number that finally lands on line 22 of Schedule E is your loss after these limits, not the raw loss from line 21.

More Than Three Properties

Schedule E has room for three properties per copy. If you own more, attach additional copies of the form with the extra properties filled in on their own address blocks and expense columns. Fill in the summary lines (23a through 26) on only one copy, using combined totals across every property.²

Deadlines and Filing

For the 2025 tax year, Form 1040 and its attached Schedule E are due April 15, 2026.¹² Filing Form 4868 by that date gives you until October 15 to submit the return, but does not extend the payment deadline; interest and penalties still run on unpaid tax from April 15.¹³

E-filing is faster and reduces the chance of a processing error on a form with depreciation schedules and carryforwards. E-filed returns are typically processed within 21 days; paper returns take six to eight weeks.

Records to Keep

Keep records supporting your Schedule E entries for at least three years from the filing date. If you fail to report income exceeding 25% of the gross income shown on your return, the retention period stretches to six years.¹⁴ For rental property, hold depreciation records for as long as you own the property and beyond, because the IRS needs to verify accumulated depreciation when you sell. Save closing documents, improvement receipts, and mileage or time logs.

If the IRS spots a mismatch between your Schedule E entries and what banks, property managers, or tenants reported, you’ll get a CP2000 notice proposing changes.¹⁵ Organized records let you answer it and move on.

1
Internal Revenue Service. 2025 Schedule E (Form 1040)
2
Internal Revenue Service. 2025 Instructions for Schedule E (Form 1040)
3
Internal Revenue Service. Topic No. 415, Renting Residential and Vacation Property
4
Office of the Law Revision Counsel. 26 USC 212 – Expenses for Production of Income
5
Office of the Law Revision Counsel. 26 USC 162 – Trade or Business Expenses
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Office of the Law Revision Counsel. 26 USC 168 – Accelerated Cost Recovery System
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Internal Revenue Service. Property (Basis, Sale of Home, Etc.) 5
8
Internal Revenue Service. Treasury, IRS Issue Guidance on the Additional First Year Depreciation Deduction Amended as Part of the One Big Beautiful Bill
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Internal Revenue Service. Instructions for Form 6198
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Office of the Law Revision Counsel. 26 USC 469 – Passive Activity Losses and Credits Limited
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Internal Revenue Service. Passive Activity and At-Risk Rules
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Internal Revenue Service. IRS Announces First Day of 2026 Filing Season
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Internal Revenue Service. Taxpayers Who Need More Time to File a Federal Tax Return Should Request an Extension
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Internal Revenue Service. How Long Should I Keep Records
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Internal Revenue Service. Understanding Your CP2000 Series Notice