Taxpayers use Schedule E to report rental income and deduct allowable expenses related to operating the rental properties, such as mortgage interest, property taxes, maintenance costs, and depreciation, to calculate their net rental profit or loss for the tax year. This net amount is then transferred to their individual income tax return (Form 1040). 

Objectives

At the end of this lesson, the student will:

1.       Know the types of income reported on Schedule E

2.       Understand the difference between repairs and improvements

3.       Know where to find the rental property depreciation chart

4.       Know the holding periods for different types of property

5.       Understand when the primary residence is excluded from capital gain