Rental Property Taxes

Start here: the main guides

Short-term rentals

• Can you 1031 a vacation home? Rev. Proc. 2008-16
  Whether a vacation or second home qualifies for a 1031 exchange: investment intent, Rev. Proc. 2008-16's 14-day rental and personal-use tests, and later moves.
• Depreciating furniture and appliances in a rental
  How to depreciate rental furniture and appliances in 2026: 5-year vs 27.5-year property, the $2,500 de minimis safe harbor, 100% bonus and replacements.
• Short-Term Rental Occupancy Taxes: A Host's Guide
  How short-term rental occupancy and lodging taxes work: platform vs host collection, city, county and state layers, registration, filing and penalties.
• Short-Term Rental Reporting: Schedule C or Schedule E? Comparison
  When a short-term rental belongs on Schedule C instead of Schedule E: substantial services, self-employment tax, hotel vs landlord, and a decision table.
• STR + cost segregation: how the loophole pairs up
  How a short-term rental plus a cost segregation study and 100% bonus depreciation can offset W-2 income in 2026, and the recapture bill that follows later.
• STR vs LTR: tax comparison for rentals Comparison
  Short-term vs long-term rental taxes compared: passive loss treatment, self-employment tax risk, occupancy taxes, depreciation and an after-tax return example.
• The 14-Day Rental Rule: Tax-Free Rent and the Augusta Rule
  How the 14-day rental rule under section 280A(g) makes short home rentals tax-free, how businesses rent an owner's home, fair rent, abuse cases, states.
• Vacation Home Rental Rules: Personal Use, Allocation and Loss Limits
  How the IRS taxes a vacation home you rent and use: personal use days, three mixed-use categories, IRS vs Bolton allocation, loss limits, an example.

1031 exchanges & selling

• 1031 boot: cash and mortgage boot explained
  What 1031 boot is, how cash boot and mortgage boot are taxed, the netting rules for debt and cash, worked examples, and planning moves to avoid boot.
• 1031 exchange checklist: Day 0 to Day 180 Checklist
  A step-by-step 1031 exchange checklist: hire a qualified intermediary first, identify by day 45, close by day 180 or your return due date, then file Form 8824.
• 1031 identification rules: 3-property, 200% and 95%
  The three ways to identify 1031 replacement property: the 3-property rule, the 200% rule and the 95% exception, plus how to revoke and worked examples.
• 1031 into a DST: Delaware statutory trust pros and cons
  Using a Delaware statutory trust as 1031 replacement property: how Rev. Rul. 2004-86 works, fees, illiquidity, accredited investor rules and questions to ask.
• 1031 with family: related-party rules
  How section 1031(f) treats like-kind exchanges with family and controlled entities: the two-year hold, the exceptions, the QI trap and safer structures.
• Combining 1031 and Section 121 on a converted rental
  How Rev. Proc. 2005-14 lets you exclude up to $250,000 or $500,000 under section 121, then defer the rest with a 1031, plus the 5-year and recapture traps.
• Dealer vs Investor: Why the IRS Label Matters for Real Estate
  Real estate dealer vs investor status: the factors courts use, ordinary income and self-employment tax consequences, splitting activities and entity separation.
• Depreciation recapture on rental property: the 25% rate
  How depreciation recapture works when you sell a rental: unrecaptured 1250 gain at up to 25%, 1245 recapture on cost seg items, the allowed-or-allowable rule.
• Installment sale of a rental: seller financing taxes
  How seller financing a rental is taxed under section 453: gross profit percentage, recapture taxed in year one, minimum interest at the AFR, and dealer limits.
• Lease Options and Rent-to-Own: How the Tax Treatment Works
  How lease options and rent-to-own deals are taxed: option fees, rent credits, when a lease option is really a sale, seller reporting and the tenant-buyer side.
• Moving into your rental: nonqualified use and the 121 exclusion
  What happens when you move into a former rental: the post-2008 nonqualified use rule, pro-rata exclusion math, depreciation recapture and timing tips.
• Reverse 1031 exchanges: buy first, sell later
  How a reverse 1031 exchange works under Rev. Proc. 2000-37: the accommodation titleholder, the 5-day, 45-day and 180-day deadlines, costs and when it pays.
• Section 121 Partial Exclusion for Job Moves and Hardship
  How the reduced home sale exclusion works when you sell before two years for a job move, health or an unforeseen event, and how rental use changes it.
• Selling a rental property: the full tax bill
  Every tax layer when you sell a rental: adjusted basis, recapture at up to 25%, capital gains, 3.8% NIIT, state tax, closing costs and suspended losses.

Passive losses & real estate pro status

• Can rental losses offset W-2 income?
  When rental losses can offset W-2 wages: the $25,000 allowance and phaseout, real estate professional status, the short-term rental rule and carryforwards.
• Do syndication losses offset W-2 income? (Usually no)
  Why real estate syndication losses rarely offset W-2 wages: limited partner passive rules, the narrow REPS exception, other passive income and carryforwards.
• Real Estate Professional Time Log: A Checklist That Holds Up Checklist
  A checklist for documenting real estate professional status: contemporaneous logs, which hours count, investor hours that do not, sample log, court lessons.
• Suspended Passive Losses: Tracking Them and Getting Them Back
  What happens to rental losses you cannot deduct: how they are suspended, how passive income or a full sale releases them, tracking, and death and gift rules.
• The $25,000 Passive Loss Allowance for Rental Real Estate
  How the $25,000 rental loss allowance works: active participation, the $100k-$150k MAGI phaseout, the married filing separately trap and carryforwards.
• The Rental Grouping and Aggregation Elections Explained
  How rental owners combine properties into one activity: the REPS aggregation election, general grouping rules, late relief, downsides, STRs.
• The REPS Spouse Strategy: How One Qualifying Spouse Changes the Return
  How married couples use real estate professional status: only one spouse must qualify, spouse hours combine for participation, a W-2 example, pitfalls.
• The Seven Material Participation Tests, Explained for Rental Owners
  The seven IRS material participation tests in plain English, the 100-hour test, which tests short-term rental owners rely on, spouse hours and proof.

Depreciation & cost segregation

• 27.5-Year Residential Depreciation: How the Math Works
  How 27.5-year rental depreciation works: the mid-month convention, placed-in-service dates, IRS Table A-6 rates by month and what happens at year 28.
• Amortizing loan fees on rental property
  Which rental loan costs are amortized, how to build the schedule, writing off the rest when the loan is paid off, refinance overlap and a worked example.
• Bonus Depreciation for Rental Property: What Qualifies in 2026
  How 100% bonus depreciation works for rental property in 2026: the January 19, 2025 acquisition date, what qualifies, bonus vs Section 179 and electing out.
• Commercial Property Depreciation: 39 Years and Mixed-Use Buildings
  How commercial property depreciation works: the 39-year schedule, the 80% residential test for mixed-use buildings, QIP and a worked example.
• Is a Cost Segregation Study Worth It? Break-Even by Property Price Comparison
  When a cost segregation study pays off: tax value vs study cost, DIY vs engineered studies, a break-even table by price, recapture and passive limits.
• Land Improvements: 15-Year Depreciation for Driveways, Fences and More
  Land improvements like driveways, fences, sidewalks and landscaping are 15-year property eligible for bonus depreciation. What counts, examples and mistakes.
• Land vs Building: Allocating Purchase Price for Depreciation
  How to split a rental purchase price between land and building for depreciation: assessor ratios, appraisals, cost approach, closing costs and audit-proofing.
• Missed Depreciation? How the Form 3115 Catch-Up Works
  Forgot to depreciate your rental? How Form 3115 and a Section 481(a) adjustment catch up missed depreciation in one year, and when amending is the better fix.
• Partial asset dispositions: write off the old roof
  How the partial asset disposition election lets you deduct the remaining basis of a replaced roof or HVAC, avoid double depreciation and hit the deadline.
• Phantom Income: Why Profitable Rentals Show a Tax Loss (and Vice Versa)
  Why a profitable rental can show a tax loss and a cash-poor one can owe tax: principal is not deductible, depreciation is not cash, and late-life phantom income
• QBI for rentals: the 250-hour safe harbor (Rev. Proc. 2019-38)
  When rental property income qualifies for the 20% QBI deduction: trade or business tests, the 250-hour safe harbor, records, excluded leases and 2026 limits.
• Rental capital improvements: lives and depreciation cheat sheet Checklist
  A cheat sheet of rental improvements and their depreciation lives: 27.5-year building parts, 15-year land improvements, 5-year appliances and QIP limits.
• Repair vs Improvement: How to Classify Rental Property Work
  Repair or improvement? How BAR test (betterment, adaptation, restoration) and unit of property rules decide if rental work is deducted now or depreciated.
• Section 179 for Rental Property: The Lodging Exclusion and Who Qualifies
  Can landlords use Section 179? The lodging exclusion, active trade or business test, taxable income limit, STR and furniture cases, and the 2026 $2.56M limit.
• Tenant Improvements and Lease Incentives: Landlord Tax Basics
  How landlords treat tenant improvement allowances, free rent and other lease incentives: who owns the build-out, depreciation, Section 110 and write-offs.
• The $2,500 De Minimis Safe Harbor for Rental Property
  How landlords use the $2,500 de minimis safe harbor: per-invoice and per-item limits, the annual election statement, repairs and common mistakes.
• The Routine Maintenance Safe Harbor for Rental Property
  How the routine maintenance safe harbor lets landlords deduct recurring upkeep: the 10-year expectation test, HVAC and painting examples, and where it fails.
• The Small Taxpayer Safe Harbor for Rental Buildings
  How the small taxpayer safe harbor lets rental owners deduct improvements: the $10M receipts and $1M building tests, the 2%/$10,000 cap and the election.
• Which Closing Costs Get Added to Rental Basis?
  Which rental property closing costs add to basis, which loan costs get amortized, how prorated taxes and interest work, and a worked closing disclosure example.

Entities, partnerships & QBI

• Do you need an LLC for rental property? The tax myth
  A rental LLC usually doesn't change your taxes. Here's what it really does for asset protection, the due-on-sale risk, umbrella insurance and when to use one.
• Owning rentals in a partnership: Form 1065 and K-1 basics
  How rental partnerships are taxed: Form 1065 and 8825, capital accounts, allocations, K-1 box 2 rental income, debt basis and exit traps when a partner leaves.
• QBI and triple net leases: why they usually don't qualify
  Why triple net lease income usually misses the 20% QBI deduction: the safe harbor exclusion, the section 162 facts test, the self-rental exception and examples.
• Real Estate in a Self-Directed IRA: Rules and UBIT Traps
  How owning rental real estate in a self-directed IRA works: prohibited transactions, disqualified persons, UDFI tax on mortgaged property, and the trade-offs.
• Real estate syndication taxes: reading your K-1
  How to read a real estate syndication K-1: box 2 bonus depreciation losses, state filings, capital calls, return of capital and recapture at sale.
• REIT Dividends vs Rental Income: A Tax Comparison Comparison
  Compare the taxes on REIT dividends and direct rental income: the 199A deduction, depreciation, passive losses, NIIT, account location and taxes on exit.
• Renting property to your own business: the self-rental rules
  How the self-rental rule turns rent from your own business into nonpassive income, why losses stay passive, plus QBI and NIIT treatment and fair rent.
• Series LLC for rental properties: what it is and when to skip it
  Series LLCs for rental properties explained: how they work, which states allow them, federal tax classification under proposed rules, lending and when to skip.
• Why putting rentals in an S corp is usually a mistake
  Why rental property in an S corp is usually a mistake: taxable distributions of property, no basis from bank debt, better entity choices and the exceptions.

Deal types, family & special situations

• ADU taxes: what building and renting a backyard unit means
  ADU taxes explained: property tax reassessment, depreciating construction costs, how a separate unit complicates section 121, and deducting loan interest.
• BRRRR taxes: what buy, rehab, rent, refinance, repeat means
  BRRRR taxes explained: why rehab costs are capitalized, when depreciation starts, why cash-out refinance money isn't income, and how interest tracing works.
• Cash-out refinance taxes: loans, interest tracing and points
  Cash-out refinance taxes explained: why loan proceeds aren't income, how interest tracing decides deductibility, personal use of proceeds and amortizing points.
• Converting your home to a rental: basis, depreciation and Section 121
  Turning your home into a rental: depreciable basis is the lower of cost or value, when depreciation starts, the 3-year window to keep the 121 exclusion.
• Fix-and-flip taxes: dealer status, ordinary income and SE tax
  Fix-and-flip taxes explained: dealer versus investor factors, ordinary income and self-employment tax, why dealers can't use 1031, and entity choices.
• Gifting a rental to your kids vs leaving it at death
  Gift a rental now or leave it at death? Carryover basis, the gift tax return, the step-up comparison, depreciation recapture that follows the gift, and numbers.
• House hacking taxes: how to split a home that's part rental
  House hacking taxes explained: allocating expenses between you and tenants, depreciating the rented part, section 121 on sale, and rooms versus units.
• Inherited rental property: step-up, depreciation reset and selling
  Inheriting a rental: the section 1014 basis step-up, restarting depreciation, selling soon after, sibling splits and the community property double step-up.
• Multifamily vs Single-Family Rentals: Tax Differences That Matter Comparison
  Multifamily vs single-family rental taxes: residential vs commercial depreciation, cost seg payoff, grouping, financing, owner-occupied duplexes and sale.
• Opportunity zones for real estate investors
  How opportunity zone real estate investing works after the 2025 law: gain deferral, the 10-year exclusion, 2027 zones, substantial improvement and who it fits.
• Rental property vs. stocks: the tax comparison Comparison
  Side-by-side tax comparison of rental property and stock investing: depreciation, passive losses, dividends, capital gains, 1031 exchanges and step-up at death.
• Rentals and the Kiddie Tax: Paying Kids From Rental Activity
  How the kiddie tax hits rental income and gains shifted to children, when paying kids wages from a rental works, and the payroll, gift and basis rules.
• Renting a room in your home: how the taxes work
  Renting out a room in your home: roommate versus tenant, splitting expenses by square footage, depreciation, short-term room rentals and the 14-day rule.
• Renting to family below market: the tax hit
  Renting a property to relatives below fair rent turns rental days into personal days, caps deductions at rent and can kill depreciation losses. Rules and fixes.
• Wholesaling real estate taxes: assignment fees, SE tax and deductions
  Wholesaling real estate taxes explained: why assignment fees are ordinary income, self-employment tax, deductible marketing costs, entity choices and estimates.

Landlord basics, records & everyday deductions

• 17 Rental Property Tax Mistakes Landlords Make Checklist
  Seventeen rental property tax mistakes landlords make, from skipping depreciation and expensing improvements to commingling funds and misreading passive rules.
• A simple rental bookkeeping system (spreadsheet or app)
  Set up simple rental property bookkeeping: separate accounts, Schedule E categories, a spreadsheet layout, when an app is worth it, and a monthly close routine.
• Appealing Rental Property Taxes: A Practical Walkthrough
  How to appeal the property tax assessment on a rental: deadlines, evidence, the income approach, and how refunds and appeal costs are handled on your return.
• Casualty losses on rentals: storms, fires and insurance
  How storm, fire and flood damage to a rental is deducted: business casualty rules, insurance payouts, section 1033 deferral, disaster elections and an example.
• Deducting expenses on a vacant rental
  What stays deductible when your rental sits empty: the held-out-for-rent test, long vacancies, repairs during vacancy, selling while vacant and evidence.
• Do Landlords Have to Send 1099s to Contractors?
  Do landlords have to file 1099-NEC for contractors? The trade or business test, the new $2,000 threshold for 2026, W-9s, penalties and a simple process.
• Energy Credits for Rental Property: 45L, 179D and What Landlords Can't Use
  Which energy tax incentives landlords can still use in 2026, why 25C and 25D never fit rentals, and the June 30, 2026 cutoffs for 45L and 179D.
• Estimated taxes for landlords
  When rental income triggers quarterly estimated taxes, the 100% and 110% safe harbors, W-2 withholding instead, the annualized method and an example.
• First-year landlord taxes: startup costs and placed-in-service
  Your first rental tax return: pre-rental and startup costs, the placed-in-service date, partial-year depreciation, vacancy before a tenant and a checklist.
• HOA Special Assessments on Rentals: Deduct or Capitalize?
  How landlords treat HOA and condo special assessments: when they are deductible repairs, when they are capital improvements to depreciate, and what to keep.
• Landlord Licenses, Rental Registration and Local Taxes
  The local layer of landlord taxes: rental licenses, registration fees, gross receipts taxes, personal property tax, commercial rent tax and a checklist.
• Landlord mileage and travel: what you can deduct
  Rental property mileage and travel deductions for landlords: 2026 IRS mileage rates, the commuting rule, out-of-town trips, improvements and logs.
• NIIT on rental income: when the 3.8% applies
  When the 3.8% NIIT hits rental income and sale gains: the thresholds, the real estate professional exception, the 500-hour safe harbor and an example.
• Rental mortgage interest: deductions, points and refinance rules
  How rental property mortgage interest is deducted on Schedule E: no home-loan caps, points amortization, cash-out refi tracing, 163(j) limits and an example.
• Rental Property Deductions: The Big Checklist Checklist
  A landlord checklist of rental property tax deductions: interest and points, insurance, taxes, HOA, repairs, travel, fees and what you cannot deduct.
• Rental property insurance: what you can deduct
  Which rental property insurance premiums are deductible: landlord, flood, umbrella, rent-loss, prepaid and title coverage, and how claims are taxed.
• Rental property records to keep (and for how long) Checklist
  A landlord recordkeeping checklist: purchase and basis documents, receipts, mileage logs, depreciation schedules, IRS retention periods and a digital setup.
• Schedule E Line by Line for Rental Property
  A line-by-line walk through Schedule E Part I for rentals: fair rental days, rents, expense lines 5-19, depreciation, Form 8582 losses and common errors.
• State taxes on out-of-state rentals
  How states tax out-of-state rental property: nonresident returns, credit for taxes paid, composite returns, withholding on sale, and a two-state worked example.
• The 5 Real Estate Tax Benefits Investors Brag About, Honestly Rated
  Real estate tax benefits rated honestly: depreciation, leverage and interest, deferral, the step-up at death, and where the investor brag breaks down.
• The landlord home office deduction
  Can a landlord deduct a home office? The trade-or-business hurdle, regular and exclusive use, actual vs simplified methods, mileage benefits and sale recapture.
• The Landlord Tax Calendar: Every Deadline in One Place Checklist
  Landlord tax deadlines for 2026-2027: 1099-NEC due dates, quarterly estimates, the April return, extensions, property tax dates and year-end rental moves.
• What Rental Income Is Taxable? Deposits, Fees and Tenant-Paid Expenses
  Which rental receipts are taxable: advance rent, security deposits, lease-break fees, tenant-paid bills, services in lieu of rent, pet and late fees, laundry.
• Year-End Tax Checklist for Real Estate Investors Checklist
  A year-end 2026 tax checklist for rental owners: depreciation, repairs, passive losses, 1099s, estimated taxes, sales, 1031 deadlines and records to gather.

Calculators

• 1031 exchange vs. sell calculator Calculator
  Compare selling a rental with a 1031 exchange: depreciation recapture at up to 25%, capital gains, 3.8% NIIT, state tax and the equity you keep working.
• Cost Segregation Savings Estimator Calculator
  Estimate the extra first-year depreciation and tax savings from a cost segregation study with bonus depreciation, compared to 27.5-year straight line.
• Depreciation Recapture and Rental Sale Tax Calculator Calculator
  Estimate the tax on selling a rental: adjusted basis, unrecaptured Section 1250 gain at up to 25%, long-term capital gains, the 3.8% NIIT and state tax.
• After-tax cash-on-cash return calculator Calculator
  Calculate a rental property's cash-on-cash return before and after tax, with 27.5-year depreciation, mortgage interest, passive loss limits and your tax rate.
• Rental Property Tax Calculator Calculator
  Estimate a rental property's taxable profit or loss, 27.5-year depreciation, how much loss the $25,000 allowance lets you use, and the federal tax effect.

More tools: all calculators.