Schedule E for Rental Property: A Line-by-Line Walkthrough

Schedule E (Form 1040) is where you report the rent from a residential rental and the costs of running it on your federal return. On the 2025 form, rents go on line 3, expenses on lines 5 through 19 (with depreciation on line 18, often figured on Form 4562), and any loss may be limited on line 22 by the passive activity rules. If you also use the home yourself for more than the greater of 14 days or 10% of its fair rental days, IRC § 280A treats it as a residence, and your rental deductions can be limited.

The short version

• For 2025 returns, Part I of Schedule E is "Income or Loss From Rental Real Estate and Royalties." Each property is listed with its address on line 1a and a type code on line 1b.
• Line 2 asks for each property's "Fair Rental Days" and "Personal Use Days." Those counts drive the personal-use rules.
• Expense lines follow the form's own list, from advertising (line 5) to other (line 19). You cannot deduct the value of your own labor or the cost of capital improvements.
• Depreciation is entered on line 18. Form 4562 must be attached only in the cases the instructions list, such as property first placed in service during 2025.
• A home used as a residence and rented for fewer than 15 days in the year is a special case: under § 280A(g) you do not report the rent and do not deduct rental expenses.

The lines on the 2025 form

These are the 2025 line names. Check the current form before you file a 2026 return.

If you have more than three properties, attach as many Schedules E as you need, but fill in lines 23a through 26 on only one of them.

Notes on specific lines

The 2025 Instructions for Schedule E add these details:

• Line 3, rents received. If a tenant gave you services or property instead of money, report the fair market value as rent. If you provide significant services, such as maid service, the rental belongs on Schedule C instead. Heat and light, cleaning of public areas and trash collection are not significant services.
• Lines 5 to 21 in general. You can deduct ordinary and necessary expenses such as taxes, interest, repairs, insurance, management fees, agents' commissions and depreciation. You cannot deduct the value of your own labor or amounts paid for capital improvements.
• Line 6, auto and travel. For 2025, the standard mileage rate is 70 cents a mile.
• Line 10, legal and professional fees. Legal fees to defend or protect title, recover property, or develop or improve property are capitalized and added to basis, not deducted here.
• Lines 12 and 13, interest. Interest paid to banks or financial institutions goes on line 12. If you received no Form 1098, or the lender is not a financial institution, use line 13. Points charged only for the use of money are deducted over the life of the loan.
• Line 14, repairs. Repairs keep the property in an ordinarily efficient operating condition, such as fixing a broken lock or painting a room. Improvements, such as adding substantial insulation or replacing an entire HVAC system, are capitalized. See repairs vs. improvements.
• Line 18, depreciation. Land is not depreciable. To split the cost between land and building, use the ratio of fair market values, or, if you are not certain of those values, the assessed values for real estate tax purposes.
• Line 19, other. Pub 527 says amounts deducted under the de minimis safe harbor may be deducted as rental expenses on line 19.

Personal-use days and the 14-day rule

A day of personal use, per the 2025 instructions, is any day or part of a day the unit was used by:

• you, for personal purposes;
• a part-owner, for personal purposes (unless rented to that person under a shared equity financing agreement);
• any family member of yours or a part-owner's, unless the unit is rented at a fair rental price to that person as his or her main home;
• anyone who pays less than a fair rental price; or
• anyone under an arrangement that lets you use some other unit.

Two kinds of days do not count as personal use: days spent working substantially full time repairing and maintaining the unit, and days you lived there as your main home before or after renting it, if you rented or tried to rent it for at least 12 consecutive months (or for less than 12 months, ending in a sale or exchange).

Under IRC § 280A(d)(1), you use a unit "as a residence" if your personal-use days exceed the greater of 14 days or 10% of the days it was rented at a fair rental. A personal-use day is not also a fair rental day.

Three results follow:

1. Expenses are split. Expenses for days of personal use are not rental expenses, whether or not the unit counts as a residence. In the instructions' own example, 7 personal days and 63 rented days means that in most cases 10% of the expenses are not rental expenses.
2. Rented fewer than 15 days. If the unit is used as a residence and rented for less than 15 days in the year, you do not report the rent and do not deduct rental expenses (§ 280A(g)). If you itemize, allowable interest, taxes and casualty losses can still go on Schedule A.
3. Used as a home and rented 15 days or more. If there is a net loss, some rental deductions are limited. Pub 527 chapter 5 and its Worksheet 5-1 walk through the order of deductions.

Where depreciation comes from: Form 4562

Residential rental buildings are depreciated over 27.5 years with the straight line method and a mid-month convention. The full rules are in rental property depreciation.

For 2025, Form 4562 must be attached only if you claim:

• depreciation on property first placed in service during 2025;
• depreciation on listed property, including a vehicle; or
• a § 179 deduction, or amortization that began in 2025.

California differences

California starts from your federal numbers, then makes its own adjustments:

• Residents report adjustments on Schedule CA (540). Nonresidents and part-year residents file Form 540NR with Schedule CA (540NR).
• California does not allow federal bonus depreciation, and its § 179 limit for 2025 is $25,000. Depreciation differences are figured on form FTB 3885A.
• For California, all rental activities are passive, even for owners who qualify as real estate professionals federally. Passive losses are figured on form FTB 3801.
• A nonresident owner still pays California tax on rent from California property. See California's 7% withholding on rent.

What to do next

1. Gather the year's rent records, bank statements and any Form 1099-MISC from a property manager.
2. Sort receipts into the Schedule E expense lines, and keep improvements separate from repairs.
3. Count fair rental days and personal-use days for each property, using the definitions above.
4. Pull your depreciation schedule, or start one if the property was placed in service this year.
5. Ask your CPA whether any loss is limited on Form 8582 and how the California adjustments apply to you.

To test the numbers before tax season, try the rental cash flow calculator. Coronado owners can also read taxes on a Coronado rental, and good records habits are covered in keeping rental records.

Frequently asked questions

Does a property manager's statement replace Schedule E?

No. A manager's year-end statement and any Form 1099-MISC it sends report what was collected and paid, but you or your preparer still complete Schedule E. The statement is a main record for rents on line 3 and expenses such as management fees (line 11) and repairs (line 14).

What if I lived in the home and then rented it out in the same year?

Days you used the unit as your main home before or after renting it do not count as personal-use days if you rented or tried to rent it for at least 12 consecutive months, or for a shorter period that ended in a sale or exchange. The depreciation basis for a converted home follows its own rule, explained in rental property depreciation.

Can I deduct the time I spend fixing up the rental?

No. The Schedule E instructions say you cannot deduct the value of your own labor. Amounts you pay for repairs go on line 14 (improvements are capitalized), and days spent working substantially full time repairing and maintaining the unit are not counted as personal-use days.

Where do I report a rental loss?

The loss shows on line 21, but how much you can use this year may be limited by the passive activity rules. Line 22 carries the deductible loss after limitation, and you may need Form 8582. See passive loss rules for rental property for the $25,000 allowance and its limits.

This is general information, not tax or legal advice. Tax rules change and depend on your facts; talk to a CPA or enrolled agent before acting.

McKee Properties manages rentals from its Coronado office; contact us with questions about your property.

Sources

• Schedule E (Form 1040) 2025 (opens in a new tab)
• 2025 Instructions for Schedule E (opens in a new tab)
• IRC § 280A (opens in a new tab)
• IRS Publication 527 (2025), Residential Rental Property (opens in a new tab)
• FTB Publication 1001 (2025) (opens in a new tab)
• 2025 FTB 3885A Instructions (opens in a new tab)
• 2025 FTB 3801 Instructions (opens in a new tab)

Verified October 19, 2026.