What is Schedule E?
Schedule E, Supplemental Income and Loss, attaches to Form 1040 and reports income that isn't wages and isn't an active business: rental real estate, royalties, and pass-through income from partnerships, S corporations, estates, and trusts (Parts II–III, fed by K-1s).
For landlords, Part I is the heart of it: rents received, then expenses — mortgage interest, property taxes, insurance, repairs, management fees, utilities, and depreciation, the non-cash deduction that often turns a cash-flow-positive property into a paper loss. Unlike Schedule C income, ordinary rental income is not subject to self-employment tax.
Who files Schedule E?
- Residential and commercial landlords — each property gets its own column.
- Short-term rental hosts — typically Schedule E, unless substantial hotel-like services push it to Schedule C.
- Royalty recipients — mineral rights, book, music, and patent royalties.
- Partners and S-corp shareholders reporting K-1 pass-through income.
Deadlines
Files with Form 1040 by the April deadline. Waiting on K-1s? Partnerships and S-corps have until mid-March to issue them — and late K-1s are the classic reason to file Form 4868 for an extension.
How to fill out Schedule E
List each property
Address, property type, fair-rental days, and personal-use days — the personal-use split matters for vacation homes.
Report rents received
All rental payments for the year, including advance rent and non-refundable deposits kept.
Deduct expenses by category
Lines 5–19: advertising, auto/travel, cleaning, insurance, mortgage interest, repairs, taxes, utilities, management fees, and more.
Claim depreciation
Residential buildings depreciate over 27.5 years (the land doesn't). Form 4562 attaches in the first year an asset goes into service.
Apply the loss rules
Rental losses are "passive" — generally capped at $25,000 against other income for active participants, phasing out above $100k of AGI, with the rest carried forward.