Are you a property owner earning rental income and wondering how to file your rental taxes? Well, filing Schedule E form and understanding what to file is a broad topic, but we’ll narrow it down for you.
What is the Schedule E form?
Schedule E form is a part of IRS form 1040 used to report incomes or losses from rentals, estates, residential interests in real estate mortgage investment conduits, trusts, S corps as well as royalties. In layperson language, it is a form that is used to record tax for income earned through non-business activities.
Who must file Schedule E and how is it taxed?
If you are a landlord owning a rental estate, then filing a Schedule E is a basic requirement for you. Also, if you purchase any property to rent it out, then you should file a Schedule E form. Schedule E form provides a listing of expenses that you need to fill out. Based on all expenses listed and the rental income earned, the tax is then determined. If you are a landlord with overwhelming taxes, you can hire professional tax preparers to handle the filing of taxes for you. However, the process is not complicated, and it is easy to file the form.
What are HOA fees?
These are monthly fees paid by homeowners who have joined a homeowner association to help in the maintenance of properties as well as amenities within the area of the association.
Where do HOA fees go on Schedule E?
To understand whether the HOA fee paid is tax-deductible or not is determined by various factors such as how the property is used. For instance, If you reside in the property, the HOA fee cannot be deducted, but if the home is rented and earns rental income, then the HOA fee becomes deductible. If the fee is tax-deductible, then it falls under the incomes to be taxed.
It is imperative to ask for professional advice from tax consultants in case you encounter challenges while filing your Schedule E form.