During tax time, if you’re a landlord, it’s important to be prepared. Rental income must be properly reported, and maximizing deductions can significantly impact your bottom line. Whether you’re managing one property or a portfolio, understanding the key forms and financial documents is essential to filing correctly and efficiently.
Start With the Right Tax Form
The first step in preparing your taxes is identifying the correct form for your situation:
- Schedule E (Form 1040) is typically used if you’re operating as a sole proprietor or have placed the property in an LLC that is a disregarded entity.
- If you’re managing the property through an S Corporation election, you will be filing using an 1120S.
- For partnerships, rental activity is usually reported on Form 1065.
Choosing the right form helps ensure compliance and avoids issues with the IRS.
Use Your 1099 and Income Statement as a Starting Point
Your Form 1099 is one of the most important documents you’ll receive. It reflects your gross rental income, which is your top-line revenue figure. At Silberman Realty, we issue and publish this in your owner portal, as well as mail it to you for convenience.
From there, pull your income statement, also available in your owner portal. This document will help you identify deductible expenses such as:
- Property management fees
- Repairs and maintenance
- Lease commissions
Also, be sure to gather your Form 1098, which is issued by your loan servicer and outlines the mortgage interest you paid during the year. Mortgage interest is often one of your largest deductible expenses.
Don’t Forget External Expenses and Depreciation
Remember to track any expenses that weren’t processed through your management company, including:
- Property taxes
- Insurance premiums
- HOA dues
These can be easy to overlook if they were paid outside your property manager’s system.
Finally, don’t calculate depreciation manually. Let TurboTax or your chosen tax software handle it for you. Depreciation is a non-cash expense that still provides significant tax benefits, and the IRS formulas can be complex.