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.
Tax-free exchange of rental property used for personal purposes. You may qualify for a tax-free exchange (a like-kind or section 1031 exchange) of one piece of rental property you own for a similar piece of rental property, even if you have used the rental property for personal purposes. You must meet the following criteria.
You own the rental property for at least 24 months before the exchange.
During the 2 years before the exchange you rent the property to another person at a fair rental price for 14 days or more.
Your personal use of the rental property during each of the two years before the exchange does not exceed the greater of 14 days or 10% of the number of days the property is rented.
For information on like-kind exchanges, see Publication 544, Sales and Other Dispositions of Assets, chapter 1.
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.
First, this publication will look at the rental-for-profit activity in which there is no personal use of the property. We will look at types of income and when each is reported, and at 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 to figure it.
Chapter 3 covers the actual reporting of your rental income and deductions, including casualties and thefts, limitations on losses, and claiming the correct amount of depreciation.
Special rental situations are grouped together in chapter 4. These include condominiums, cooperatives, property changed to rental use, renting only part of your property, and a not-for-profit rental activity.
Finally, in chapter 5, we will look at the rules for rental income and expenses when there is also personal use of the dwelling unit, such as a vacation home.
Internal Revenue Service
Individual and Specialty Forms and Publications Branch
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Internal Revenue Service
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Bloomington, IL 61705-6613
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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