Table of Contents
For the latest information about developments related to Publication 527, such as legislation enacted after it was published, go to www.irs.gov/pub527.
Net Investment Income Tax (NIIT). You may be subject to the Net Investment Income Tax (NIIT). NIIT is a 3.8% tax on the lesser of net investment income or the excess of modified adjusted gross income (MAGI) over the threshold amount. Net investment income may include rental income and other income from passive activities. Use Form 8960, Net Investment Income Tax, to figure this tax. For more information on NIIT, go to IRS.gov and enter “Net Investment Income Tax” in the search box.
Photographs of missing children. The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child.
Do you own a second house that you rent out all the time? Do you own a vacation home that you rent out when you or your family isn't using it?
These are two common types of residential rental activities discussed in this publication. In most cases, all rental income must be reported on your tax return, but there are differences in the expenses you are allowed to deduct and in the way the rental activity is reported on your return.
Chapter 1 discusses rental-for-profit activity in which there is no personal use of the property. It examines some common types of rental income and when each is reported, as well as some common types of expenses and which are deductible.
Chapter 2 discusses depreciation as it applies to your rental real estate activity—what property can be depreciated and how much it can be depreciated.
Chapter 3 covers the reporting of your rental income and deductions, including casualties and thefts, limitations on losses, and claiming the correct amount of depreciation.
Chapter 4 discusses special rental situations. These include condominiums, cooperatives, property changed to rental use, renting only part of your property, and a not-for-profit rental activity.
Chapter 5 discusses the rules for rental income and expenses when there is also personal use of the dwelling unit, such as a vacation home.
Finally, chapter 6 explains how to get tax help from the IRS.
Internal Revenue Service
Tax Forms and Publications
1111 Constitution Ave. NW, IR-6526
Washington, DC 20224
463 Travel, Entertainment, Gift, and Car Expenses
523 Selling Your Home
534 Depreciating Property Placed in Service Before 1987
535 Business Expenses
544 Sales and Other Dispositions of Assets
547 Casualties, Disasters, and Thefts
551 Basis of Assets
925 Passive Activity and At-Risk Rules
946 How To Depreciate Property
Form (and Instructions)
4562 Depreciation and Amortization
5213 Election To Postpone Determination as To Whether the Presumption Applies That an Activity Is Engaged in for Profit
8582 Passive Activity Loss Limitations
Schedule E (Form 1040) Supplemental Income and Loss
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