NOTE: Each of the forms mentioned here are accessible on the IRS’s website, at: http://www.irs.gov/Forms-&-Pubs. All the required documents will likely be available in any tax preparation software programs, should you use one of them.

Individual Ownership

Mutual property ownership with a spouse, joint tenancy with right of survivorship, and also tenancy in common are actually included in this.

Form 1040. All individual taxpayers must use Form 1040, and that is exactly where you’ve got to start. At line 17 of the first page of Form 1040 is your net leasing revenue or losses, subjected to taxation. You aren’t able to take advantage of the easy Forms 1040A or 1040-EZ, as a property owner with rental property activity.

Schedule E. Schedule E is one addendum of Form 1040. Of Schedule E’s numerous purposes, the usage of reporting rental property profit and expenditures is relevant to you. The single part of Schedule E that you should fill out is the part marked “Part I”. There are relevant tips you should be aware of, which include: when reporting on a rental property that you mutually own with a person, who isn’t your significant other, you just need to report the costs you accrued along with the earnings that you collected. In addition, remember that if you rented for just a part of the year, or you have been renting part of your personal property, you’ll need to allocate expenses regarding rental and non-rental use. View the series of articles entitled Tax Deductible Rental Property Expenses, available in this Guide, for further tips.

Form 4562. Form 4562 is employed to quantify depreciation on your rental property, which you’ll deduct at line 18 of Schedule E. To get more advice, look at the article entitled, Depreciation Expenses for Rental Property, that’s in this Guide.

Partnership/Corporate Ownership

A general or limited partnership, or S corporation is an example.

Form 1065/1120-S. If you’ve got a joint venture, you will need to employ Form 1065, the tax form a collaboration uses to report all of its organization activities. Form 1120-S is used by an S corporation to report enterprise activities. Your annual net rental revenue or financial loss should be reported on Schedule K, line 2 of Form 1065 or 1120-S (Such forms are integrated with Schedule K).

Form 8825. This document acts just like Schedule E, but is for partnerships and S corporations. It is actually in essence a lot like Schedule E. Make certain that all earnings and expenditures accrued by the corporation or partnership are included in their complete sums (these are divided among each business partner or shareholder later).

Schedule K-1. This tax document reports the total rental property income or financial loss owing to each partner or investor in accordance with that business partner or investor’s property ownership interest. The details of the K-1 provided to each individual business partner has to be reported on their own Form 1040, Schedule E, Part II.

Limited Liability Co-ownership

You’ll be able to file as if you are an independent owner because, for taxation purposes, a single-member LLC is really a disregarded entity (look above). A multiple-member LLC has the option to be taxed either as a partnership or as an S corporation (see above).

Auburn CPA+John Huddleston has written extensively on tax related subjects of interest to small business owners. He is a graduate of Washington State University and the University of Washington School of Law.