Rental tax questions to take to your CPA

What is possible on a rental return

Ordinary expenses on the lines you already tag. Depreciation on Form 4562 (sometimes with a cost-segregation study). Mileage at the IRS standard rate if you kept a log. A QBI deduction on Form 8995 if the rental is a trade or business. Passive-loss limits that can turn a paper loss into $0 this year. Safe harbors that keep some jobs as repairs instead of improvements. None of those are computed here. Your CPA applies Pub 527 and the rest of this list.

Line 14: Repairs vs improvements

A repair keeps the property as it was (fix a leak). An improvement is a betterment, restoration, or adaptation and is usually capitalized, then depreciated — not dumped on line 14. Pub 527 also covers the routine-maintenance safe harbor and the de minimis safe harbor some landlords use. Ask your CPA before you treat a remodel as a repair.

We put what you tagged Repairs on line 14. We do not decide capital vs repair.

• IRS Pub 527 — Residential Rental Property
• Tax Topic 414 — Rental income and expenses

Line 18: Depreciation (Form 4562)

Residential rental buildings are usually depreciated over 27.5 years. Land is not. You need cost basis, land vs building split, and placed-in-service date. Some landlords ask a CPA about cost segregation or bonus depreciation for personal property inside the building — that is still Form 4562, not this app.

Line 18 is only what you typed. We do not compute depreciation.

• About Form 4562
• IRS Pub 946 — How to Depreciate Property

Line 12: Mortgage interest vs the 1098

The lender’s Form 1098 is what the CPA matches. Your books can be close and still need the form. Points and prepaid interest have their own rules in Pub 527.

Line 12 is mortgage interest you typed. We do not import a 1098.

• About Form 1098
• Pub 527 — interest and points

Line 6: Auto and travel / mileage

Trips to the rental for repairs or to show the unit can be deductible. You need a contemporaneous log (date, miles, purpose). The IRS publishes a standard mileage rate each year. Commuting from your house as a landlord is often not the same as a job commute — ask your CPA.

Line 6 is an amount you typed. We do not compute the IRS mileage rate.

• IRS standard mileage rates
• IRS Pub 463 — Travel, Gift, and Car Expenses

Line 9: Rental insurance, not the house you live in

Landlord or dwelling policies on the rental usually belong on line 9. Premiums for the home you live in generally do not. If one policy covers both, your CPA may need to allocate.

Line 9 is insurance you tagged. We do not split a mixed policy.

• Pub 527 — insurance
• Tax Topic 414

Line 10: Legal and tax-prep fees

Eviction, lease, and a share of the return that covers the rental can belong here. Personal legal work and the part of the CPA bill for your W-2 usually do not. Ask how they split the invoice.

Line 10 is what you tagged Legal and Professional Fees.

• Pub 527 — professional fees
• Schedule E instructions

Line 16: Property taxes vs income tax

Real estate taxes on the rental are the usual line 16 item. Federal income tax is not. Some 1098s also box real-estate taxes the lender paid — your CPA matches that, not just the books.

Line 16 is taxes you typed. We do not import a tax bill or 1098.

• Pub 527 — taxes
• About Form 1098

Line 7: Cleaning vs a capital job

Ordinary cleaning and turnover belong on line 7. A rehab that puts the unit in a new condition is usually an improvement (depreciated), not cleaning. Same capital-vs-repair question as line 14.

Line 7 is what you tagged Cleaning and Maintenance.

• Pub 527 — repairs and improvements
• Tax Topic 414

Line 19: HOA, bank fees, and other

Line 19 is the leftover ordinary list: HOA dues on the rental, bank fees, pest control, and similar. Do not park improvements here to skip depreciation. Your CPA may move a row.

Line 19 is Other Expenses you typed, plus categories we cannot map to a numbered line.

• Schedule E instructions — line 19
• Pub 527

Line 21: Qualified business income (Form 8995)

Some rental real estate can qualify for the QBI deduction if it is a trade or business under IRS rules (including a safe harbor some landlords use). Income limits and W-2 wage tests can apply. This is a return-level computation. We do not know if you qualify.

We do not compute QBI, Form 8995, or the safe-harbor hours test.

• IRS — Qualified Business Income deduction
• About Form 8995
• Pub 527 — rental as a trade or business

Line 21: Passive activity and real-estate professional rules

Rental losses are often passive. They may be limited this year and carried forward on Form 8582. Real estate professional status and the $25,000 special allowance have hour and participation tests. That is how a loss on paper can be $0 on the return.

Line 21 is rents minus ordinary expenses on the books. Not an allowed-loss figure.

• IRS Pub 925 — Passive Activity and At-Risk Rules
• Tax Topic 425 — Passive activities
• About Form 8582

Line 3: Deposits are not rent

A refundable security deposit is not rental income while you hold it. A forfeited deposit usually becomes income in that year. Ask your CPA before you recategorize.

Deposits stay off line 3 in the download until you change the category.

• Pub 527 — security deposits
• Schedule E (Form 1040)

What to keep

Receipts, 1098s, closing statements, a mileage log, and a placed-in-service file for each building. The IRS can ask years later. Photos on your phone help; they are not a substitute for the form your CPA files.

Optional receipt photos stay on this device. They are not in the CSV and we do not upload them.

• Pub 527 — records
• Schedule E (Form 1040)