Schedule E (Form 1040): Supplemental Income and Loss – 2013 Tax Year Guide

What the Form Is For

Schedule E (Form 1040) is used to report supplemental income and losses—that is, income not derived from wages or self-employment. For 2013, you used Schedule E to report income or losses from:

Rental real estate (houses, apartments, vacation homes, etc.)
Royalties (payments for the use of oil, gas, mineral rights, copyrights, or patents)
Partnerships and S corporations (your share of income or loss from business interests)
Estates and trusts (income you receive as a beneficiary)
REMICs (Real Estate Mortgage Investment Conduits)

Landlords most often use Part I to report rental property income and expenses, while investors use Parts II and III to report pass-through income from partnerships, S corporations, or trusts.

When You’d Use It (Late or Amended Filing)

Original Filing

Schedule E for 2013 was due with your Form 1040 by April 15, 2014, or October 15, 2014 if you filed for an extension.

Late Filing

If you never filed your 2013 return, you should do so immediately. While you can file late at any time, refund claims are limited to three years from the original due date (April 15, 2017, for 2013 returns).

Amended Returns

If you filed but made errors—such as missing rental income, forgetting expenses, or receiving a corrected Schedule K-1—you can file Form 1040-X with a corrected Schedule E.
You generally have three years from the date of filing or two years from the date you paid the tax (whichever is later) to amend. For most 2013 returns, this expired April 15, 2017.

Key Rules or Details for 2013

Net Investment Income Tax (NIIT)

A new 3.8% NIIT began in 2013 for individuals with modified AGI above $200,000 (single) or $250,000 (married filing jointly).
This applied to rental, royalty, and other passive income reported on Schedule E and was computed separately on Form 8960.

Standard Mileage Rate

Landlords could deduct 56.5¢ per mile for 2013 business travel related to rental activities, or actual vehicle expenses.

Passive Activity Loss Rules

Rental real estate is typically passive, meaning losses can offset only passive income.
However, if you actively participated (approved tenants, managed repairs, etc.), you could deduct up to $25,000 in losses against regular income if your MAGI ≤ $100,000.
The allowance phased out between $100,000–$150,000.

At-Risk Rules

Losses were deductible only up to the amount you had at risk—money you could actually lose.
Qualified real estate loans were generally considered “at risk.”

Real Estate Professional Exception

If you worked more than 750 hours per year in real estate trades and spent over half your working time there, your rentals weren’t automatically passive, allowing full loss deductions.

Step-by-Step: Completing Schedule E (Rental Example)

Step 1: Property Information

List each property’s address and type (single-family, duplex, etc.).
Report rental vs. personal-use days—personal use over 14 days or 10% of rental days limits deductions.

Step 2: Report Income

Enter total rent received on line 3, including advance rent and kept security deposits.
Royalties go on line 4.

Step 3: Deduct Expenses

List expenses (lines 5–19): advertising, insurance, repairs, mortgage interest, property taxes, utilities, and depreciation (via Form 4562).

Step 4: Calculate Depreciation

Residential rental buildings depreciate over 27.5 years (straight-line method).
Depreciation is required—even if not claimed, the IRS assumes it was taken.

Step 5: Total and Net Income

Add up all expenses (line 20), then subtract from rental income (line 21).
If losses exceed income, check at-risk limits and Form 6198.

Step 6: Deductible Loss

If limited by passive activity rules, use Form 8582 to compute your deductible amount.
If eligible, enter up to $25,000 of active-participation loss.

Step 7: Combine Totals

Total all income and losses (line 26) and transfer the result to Form 1040, line 17.

Common Mistakes and How to Avoid Them

1. Repairs vs. Improvements

Improvements (new roof, remodel) must be capitalized and depreciated, not deducted as repairs.

2. Skipping Depreciation

You must claim it yearly—otherwise, IRS will “recapture” it when you sell.

3. Misreporting Personal Use

Vacation use must be prorated; “working vacations” generally count as personal.

4. Ignoring the QJV Election

Married couples jointly managing rentals could elect Qualified Joint Venture status, avoiding partnership filings.

5. Misunderstanding Passive Loss Limits

Losses over $25,000 (or over the income limit) are suspended until offset by passive income or property sale.

6. Poor Documentation

Keep receipts, mileage logs, and proof of payments for at least three years—longer if depreciating property.

What Happens After You File

Processing: Refunds (if any) arrived within 21 days (e-file) or 6–8 weeks (paper).
IRS Matching: Income is verified against Forms 1099-MISC and Schedule K-1s.
Loss Carryforwards: Suspended losses carry forward until you have passive income or sell the property.
Audit Risks: Common triggers include repeated large losses, vacation homes used personally, or mismatched income reports.
Recordkeeping: Keep 2013 records at least three years; depreciation records until three years after sale.

Frequently Asked Questions (FAQs)

Q1: Can I deduct rental losses if I have a full-time job?

Yes, if you actively participated and your MAGI ≤ $100,000, you could deduct up to $25,000 in losses.

Q2: What if I rented my vacation home for only 10 days?

If rented fewer than 15 days, don’t report the income—and you can’t deduct expenses (the “Augusta Rule”).

Q3: Do I need Schedule E if I received a Schedule K-1?

Yes, report your K-1 income on Schedule E, Part II or III, depending on the source.

Q4: Can I deduct the cost of improvements?

No, capitalize and depreciate them over time using Form 4562.

Q5: What’s the difference between Schedule E and Schedule C?

Schedule E: Passive rental activity (no substantial services)
Schedule C: Active business (e.g., bed & breakfast, Airbnb with cleaning/concierge services)

Q6: I’m a limited partner—where do I report this?

Report on Schedule E, Part II. Losses are passive and typically not deductible against ordinary income.

Q7: What if I forgot income or overstated expenses?

File Form 1040-X with a corrected Schedule E as soon as possible to reduce penalties and interest.

Additional Resources

Note: This guide reflects IRS rules in effect for the 2013 tax year. Always verify current requirements when filing or amending older returns.

Frequently Asked Questions

Schedule E (Form 1040): Supplemental Income and Loss – 2013 Tax Year Guide

What the Form Is For

Schedule E (Form 1040) is used to report supplemental income and losses—that is, income not derived from wages or self-employment. For 2013, you used Schedule E to report income or losses from:

Rental real estate (houses, apartments, vacation homes, etc.)
Royalties (payments for the use of oil, gas, mineral rights, copyrights, or patents)
Partnerships and S corporations (your share of income or loss from business interests)
Estates and trusts (income you receive as a beneficiary)
REMICs (Real Estate Mortgage Investment Conduits)

Landlords most often use Part I to report rental property income and expenses, while investors use Parts II and III to report pass-through income from partnerships, S corporations, or trusts.

When You’d Use It (Late or Amended Filing)

Original Filing

Schedule E for 2013 was due with your Form 1040 by April 15, 2014, or October 15, 2014 if you filed for an extension.

Late Filing

If you never filed your 2013 return, you should do so immediately. While you can file late at any time, refund claims are limited to three years from the original due date (April 15, 2017, for 2013 returns).

Amended Returns

If you filed but made errors—such as missing rental income, forgetting expenses, or receiving a corrected Schedule K-1—you can file Form 1040-X with a corrected Schedule E.
You generally have three years from the date of filing or two years from the date you paid the tax (whichever is later) to amend. For most 2013 returns, this expired April 15, 2017.

Key Rules or Details for 2013

Net Investment Income Tax (NIIT)

A new 3.8% NIIT began in 2013 for individuals with modified AGI above $200,000 (single) or $250,000 (married filing jointly).
This applied to rental, royalty, and other passive income reported on Schedule E and was computed separately on Form 8960.

Standard Mileage Rate

Landlords could deduct 56.5¢ per mile for 2013 business travel related to rental activities, or actual vehicle expenses.

Passive Activity Loss Rules

Rental real estate is typically passive, meaning losses can offset only passive income.
However, if you actively participated (approved tenants, managed repairs, etc.), you could deduct up to $25,000 in losses against regular income if your MAGI ≤ $100,000.
The allowance phased out between $100,000–$150,000.

At-Risk Rules

Losses were deductible only up to the amount you had at risk—money you could actually lose.
Qualified real estate loans were generally considered “at risk.”

Real Estate Professional Exception

If you worked more than 750 hours per year in real estate trades and spent over half your working time there, your rentals weren’t automatically passive, allowing full loss deductions.

Step-by-Step: Completing Schedule E (Rental Example)

Step 1: Property Information

List each property’s address and type (single-family, duplex, etc.).
Report rental vs. personal-use days—personal use over 14 days or 10% of rental days limits deductions.

Step 2: Report Income

Enter total rent received on line 3, including advance rent and kept security deposits.
Royalties go on line 4.

Step 3: Deduct Expenses

List expenses (lines 5–19): advertising, insurance, repairs, mortgage interest, property taxes, utilities, and depreciation (via Form 4562).

Step 4: Calculate Depreciation

Residential rental buildings depreciate over 27.5 years (straight-line method).
Depreciation is required—even if not claimed, the IRS assumes it was taken.

Step 5: Total and Net Income

Add up all expenses (line 20), then subtract from rental income (line 21).
If losses exceed income, check at-risk limits and Form 6198.

Step 6: Deductible Loss

If limited by passive activity rules, use Form 8582 to compute your deductible amount.
If eligible, enter up to $25,000 of active-participation loss.

Step 7: Combine Totals

Total all income and losses (line 26) and transfer the result to Form 1040, line 17.

Common Mistakes and How to Avoid Them

1. Repairs vs. Improvements

Improvements (new roof, remodel) must be capitalized and depreciated, not deducted as repairs.

2. Skipping Depreciation

You must claim it yearly—otherwise, IRS will “recapture” it when you sell.

3. Misreporting Personal Use

Vacation use must be prorated; “working vacations” generally count as personal.

4. Ignoring the QJV Election

Married couples jointly managing rentals could elect Qualified Joint Venture status, avoiding partnership filings.

5. Misunderstanding Passive Loss Limits

Losses over $25,000 (or over the income limit) are suspended until offset by passive income or property sale.

6. Poor Documentation

Keep receipts, mileage logs, and proof of payments for at least three years—longer if depreciating property.

What Happens After You File

Processing: Refunds (if any) arrived within 21 days (e-file) or 6–8 weeks (paper).
IRS Matching: Income is verified against Forms 1099-MISC and Schedule K-1s.
Loss Carryforwards: Suspended losses carry forward until you have passive income or sell the property.
Audit Risks: Common triggers include repeated large losses, vacation homes used personally, or mismatched income reports.
Recordkeeping: Keep 2013 records at least three years; depreciation records until three years after sale.

Frequently Asked Questions (FAQs)

Q1: Can I deduct rental losses if I have a full-time job?

Yes, if you actively participated and your MAGI ≤ $100,000, you could deduct up to $25,000 in losses.

Q2: What if I rented my vacation home for only 10 days?

If rented fewer than 15 days, don’t report the income—and you can’t deduct expenses (the “Augusta Rule”).

Q3: Do I need Schedule E if I received a Schedule K-1?

Yes, report your K-1 income on Schedule E, Part II or III, depending on the source.

Q4: Can I deduct the cost of improvements?

No, capitalize and depreciate them over time using Form 4562.

Q5: What’s the difference between Schedule E and Schedule C?

Schedule E: Passive rental activity (no substantial services)
Schedule C: Active business (e.g., bed & breakfast, Airbnb with cleaning/concierge services)

Q6: I’m a limited partner—where do I report this?

Report on Schedule E, Part II. Losses are passive and typically not deductible against ordinary income.

Q7: What if I forgot income or overstated expenses?

File Form 1040-X with a corrected Schedule E as soon as possible to reduce penalties and interest.

Additional Resources

Note: This guide reflects IRS rules in effect for the 2013 tax year. Always verify current requirements when filing or amending older returns.

Frequently Asked Questions

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Schedule E (Form 1040): Supplemental Income and Loss – 2013 Tax Year Guide

What the Form Is For

Schedule E (Form 1040) is used to report supplemental income and losses—that is, income not derived from wages or self-employment. For 2013, you used Schedule E to report income or losses from:

Rental real estate (houses, apartments, vacation homes, etc.)
Royalties (payments for the use of oil, gas, mineral rights, copyrights, or patents)
Partnerships and S corporations (your share of income or loss from business interests)
Estates and trusts (income you receive as a beneficiary)
REMICs (Real Estate Mortgage Investment Conduits)

Landlords most often use Part I to report rental property income and expenses, while investors use Parts II and III to report pass-through income from partnerships, S corporations, or trusts.

When You’d Use It (Late or Amended Filing)

Original Filing

Schedule E for 2013 was due with your Form 1040 by April 15, 2014, or October 15, 2014 if you filed for an extension.

Late Filing

If you never filed your 2013 return, you should do so immediately. While you can file late at any time, refund claims are limited to three years from the original due date (April 15, 2017, for 2013 returns).

Amended Returns

If you filed but made errors—such as missing rental income, forgetting expenses, or receiving a corrected Schedule K-1—you can file Form 1040-X with a corrected Schedule E.
You generally have three years from the date of filing or two years from the date you paid the tax (whichever is later) to amend. For most 2013 returns, this expired April 15, 2017.

Key Rules or Details for 2013

Net Investment Income Tax (NIIT)

A new 3.8% NIIT began in 2013 for individuals with modified AGI above $200,000 (single) or $250,000 (married filing jointly).
This applied to rental, royalty, and other passive income reported on Schedule E and was computed separately on Form 8960.

Standard Mileage Rate

Landlords could deduct 56.5¢ per mile for 2013 business travel related to rental activities, or actual vehicle expenses.

Passive Activity Loss Rules

Rental real estate is typically passive, meaning losses can offset only passive income.
However, if you actively participated (approved tenants, managed repairs, etc.), you could deduct up to $25,000 in losses against regular income if your MAGI ≤ $100,000.
The allowance phased out between $100,000–$150,000.

At-Risk Rules

Losses were deductible only up to the amount you had at risk—money you could actually lose.
Qualified real estate loans were generally considered “at risk.”

Real Estate Professional Exception

If you worked more than 750 hours per year in real estate trades and spent over half your working time there, your rentals weren’t automatically passive, allowing full loss deductions.

Step-by-Step: Completing Schedule E (Rental Example)

Step 1: Property Information

List each property’s address and type (single-family, duplex, etc.).
Report rental vs. personal-use days—personal use over 14 days or 10% of rental days limits deductions.

Step 2: Report Income

Enter total rent received on line 3, including advance rent and kept security deposits.
Royalties go on line 4.

Step 3: Deduct Expenses

List expenses (lines 5–19): advertising, insurance, repairs, mortgage interest, property taxes, utilities, and depreciation (via Form 4562).

Step 4: Calculate Depreciation

Residential rental buildings depreciate over 27.5 years (straight-line method).
Depreciation is required—even if not claimed, the IRS assumes it was taken.

Step 5: Total and Net Income

Add up all expenses (line 20), then subtract from rental income (line 21).
If losses exceed income, check at-risk limits and Form 6198.

Step 6: Deductible Loss

If limited by passive activity rules, use Form 8582 to compute your deductible amount.
If eligible, enter up to $25,000 of active-participation loss.

Step 7: Combine Totals

Total all income and losses (line 26) and transfer the result to Form 1040, line 17.

Common Mistakes and How to Avoid Them

1. Repairs vs. Improvements

Improvements (new roof, remodel) must be capitalized and depreciated, not deducted as repairs.

2. Skipping Depreciation

You must claim it yearly—otherwise, IRS will “recapture” it when you sell.

3. Misreporting Personal Use

Vacation use must be prorated; “working vacations” generally count as personal.

4. Ignoring the QJV Election

Married couples jointly managing rentals could elect Qualified Joint Venture status, avoiding partnership filings.

5. Misunderstanding Passive Loss Limits

Losses over $25,000 (or over the income limit) are suspended until offset by passive income or property sale.

6. Poor Documentation

Keep receipts, mileage logs, and proof of payments for at least three years—longer if depreciating property.

What Happens After You File

Processing: Refunds (if any) arrived within 21 days (e-file) or 6–8 weeks (paper).
IRS Matching: Income is verified against Forms 1099-MISC and Schedule K-1s.
Loss Carryforwards: Suspended losses carry forward until you have passive income or sell the property.
Audit Risks: Common triggers include repeated large losses, vacation homes used personally, or mismatched income reports.
Recordkeeping: Keep 2013 records at least three years; depreciation records until three years after sale.

Frequently Asked Questions (FAQs)

Q1: Can I deduct rental losses if I have a full-time job?

Yes, if you actively participated and your MAGI ≤ $100,000, you could deduct up to $25,000 in losses.

Q2: What if I rented my vacation home for only 10 days?

If rented fewer than 15 days, don’t report the income—and you can’t deduct expenses (the “Augusta Rule”).

Q3: Do I need Schedule E if I received a Schedule K-1?

Yes, report your K-1 income on Schedule E, Part II or III, depending on the source.

Q4: Can I deduct the cost of improvements?

No, capitalize and depreciate them over time using Form 4562.

Q5: What’s the difference between Schedule E and Schedule C?

Schedule E: Passive rental activity (no substantial services)
Schedule C: Active business (e.g., bed & breakfast, Airbnb with cleaning/concierge services)

Q6: I’m a limited partner—where do I report this?

Report on Schedule E, Part II. Losses are passive and typically not deductible against ordinary income.

Q7: What if I forgot income or overstated expenses?

File Form 1040-X with a corrected Schedule E as soon as possible to reduce penalties and interest.

Additional Resources

Note: This guide reflects IRS rules in effect for the 2013 tax year. Always verify current requirements when filing or amending older returns.

Frequently Asked Questions

Schedule E (Form 1040): Supplemental Income and Loss – 2013 Tax Year Guide

What the Form Is For

Schedule E (Form 1040) is used to report supplemental income and losses—that is, income not derived from wages or self-employment. For 2013, you used Schedule E to report income or losses from:

Rental real estate (houses, apartments, vacation homes, etc.)
Royalties (payments for the use of oil, gas, mineral rights, copyrights, or patents)
Partnerships and S corporations (your share of income or loss from business interests)
Estates and trusts (income you receive as a beneficiary)
REMICs (Real Estate Mortgage Investment Conduits)

Landlords most often use Part I to report rental property income and expenses, while investors use Parts II and III to report pass-through income from partnerships, S corporations, or trusts.

When You’d Use It (Late or Amended Filing)

Original Filing

Schedule E for 2013 was due with your Form 1040 by April 15, 2014, or October 15, 2014 if you filed for an extension.

Late Filing

If you never filed your 2013 return, you should do so immediately. While you can file late at any time, refund claims are limited to three years from the original due date (April 15, 2017, for 2013 returns).

Amended Returns

If you filed but made errors—such as missing rental income, forgetting expenses, or receiving a corrected Schedule K-1—you can file Form 1040-X with a corrected Schedule E.
You generally have three years from the date of filing or two years from the date you paid the tax (whichever is later) to amend. For most 2013 returns, this expired April 15, 2017.

Key Rules or Details for 2013

Net Investment Income Tax (NIIT)

A new 3.8% NIIT began in 2013 for individuals with modified AGI above $200,000 (single) or $250,000 (married filing jointly).
This applied to rental, royalty, and other passive income reported on Schedule E and was computed separately on Form 8960.

Standard Mileage Rate

Landlords could deduct 56.5¢ per mile for 2013 business travel related to rental activities, or actual vehicle expenses.

Passive Activity Loss Rules

Rental real estate is typically passive, meaning losses can offset only passive income.
However, if you actively participated (approved tenants, managed repairs, etc.), you could deduct up to $25,000 in losses against regular income if your MAGI ≤ $100,000.
The allowance phased out between $100,000–$150,000.

At-Risk Rules

Losses were deductible only up to the amount you had at risk—money you could actually lose.
Qualified real estate loans were generally considered “at risk.”

Real Estate Professional Exception

If you worked more than 750 hours per year in real estate trades and spent over half your working time there, your rentals weren’t automatically passive, allowing full loss deductions.

Step-by-Step: Completing Schedule E (Rental Example)

Step 1: Property Information

List each property’s address and type (single-family, duplex, etc.).
Report rental vs. personal-use days—personal use over 14 days or 10% of rental days limits deductions.

Step 2: Report Income

Enter total rent received on line 3, including advance rent and kept security deposits.
Royalties go on line 4.

Step 3: Deduct Expenses

List expenses (lines 5–19): advertising, insurance, repairs, mortgage interest, property taxes, utilities, and depreciation (via Form 4562).

Step 4: Calculate Depreciation

Residential rental buildings depreciate over 27.5 years (straight-line method).
Depreciation is required—even if not claimed, the IRS assumes it was taken.

Step 5: Total and Net Income

Add up all expenses (line 20), then subtract from rental income (line 21).
If losses exceed income, check at-risk limits and Form 6198.

Step 6: Deductible Loss

If limited by passive activity rules, use Form 8582 to compute your deductible amount.
If eligible, enter up to $25,000 of active-participation loss.

Step 7: Combine Totals

Total all income and losses (line 26) and transfer the result to Form 1040, line 17.

Common Mistakes and How to Avoid Them

1. Repairs vs. Improvements

Improvements (new roof, remodel) must be capitalized and depreciated, not deducted as repairs.

2. Skipping Depreciation

You must claim it yearly—otherwise, IRS will “recapture” it when you sell.

3. Misreporting Personal Use

Vacation use must be prorated; “working vacations” generally count as personal.

4. Ignoring the QJV Election

Married couples jointly managing rentals could elect Qualified Joint Venture status, avoiding partnership filings.

5. Misunderstanding Passive Loss Limits

Losses over $25,000 (or over the income limit) are suspended until offset by passive income or property sale.

6. Poor Documentation

Keep receipts, mileage logs, and proof of payments for at least three years—longer if depreciating property.

What Happens After You File

Processing: Refunds (if any) arrived within 21 days (e-file) or 6–8 weeks (paper).
IRS Matching: Income is verified against Forms 1099-MISC and Schedule K-1s.
Loss Carryforwards: Suspended losses carry forward until you have passive income or sell the property.
Audit Risks: Common triggers include repeated large losses, vacation homes used personally, or mismatched income reports.
Recordkeeping: Keep 2013 records at least three years; depreciation records until three years after sale.

Frequently Asked Questions (FAQs)

Q1: Can I deduct rental losses if I have a full-time job?

Yes, if you actively participated and your MAGI ≤ $100,000, you could deduct up to $25,000 in losses.

Q2: What if I rented my vacation home for only 10 days?

If rented fewer than 15 days, don’t report the income—and you can’t deduct expenses (the “Augusta Rule”).

Q3: Do I need Schedule E if I received a Schedule K-1?

Yes, report your K-1 income on Schedule E, Part II or III, depending on the source.

Q4: Can I deduct the cost of improvements?

No, capitalize and depreciate them over time using Form 4562.

Q5: What’s the difference between Schedule E and Schedule C?

Schedule E: Passive rental activity (no substantial services)
Schedule C: Active business (e.g., bed & breakfast, Airbnb with cleaning/concierge services)

Q6: I’m a limited partner—where do I report this?

Report on Schedule E, Part II. Losses are passive and typically not deductible against ordinary income.

Q7: What if I forgot income or overstated expenses?

File Form 1040-X with a corrected Schedule E as soon as possible to reduce penalties and interest.

Additional Resources

Note: This guide reflects IRS rules in effect for the 2013 tax year. Always verify current requirements when filing or amending older returns.

Frequently Asked Questions

Schedule E (Form 1040): Supplemental Income and Loss – 2013 Tax Year Guide

Heading

What the Form Is For

Schedule E (Form 1040) is used to report supplemental income and losses—that is, income not derived from wages or self-employment. For 2013, you used Schedule E to report income or losses from:

Rental real estate (houses, apartments, vacation homes, etc.)
Royalties (payments for the use of oil, gas, mineral rights, copyrights, or patents)
Partnerships and S corporations (your share of income or loss from business interests)
Estates and trusts (income you receive as a beneficiary)
REMICs (Real Estate Mortgage Investment Conduits)

Landlords most often use Part I to report rental property income and expenses, while investors use Parts II and III to report pass-through income from partnerships, S corporations, or trusts.

When You’d Use It (Late or Amended Filing)

Original Filing

Schedule E for 2013 was due with your Form 1040 by April 15, 2014, or October 15, 2014 if you filed for an extension.

Late Filing

If you never filed your 2013 return, you should do so immediately. While you can file late at any time, refund claims are limited to three years from the original due date (April 15, 2017, for 2013 returns).

Amended Returns

If you filed but made errors—such as missing rental income, forgetting expenses, or receiving a corrected Schedule K-1—you can file Form 1040-X with a corrected Schedule E.
You generally have three years from the date of filing or two years from the date you paid the tax (whichever is later) to amend. For most 2013 returns, this expired April 15, 2017.

Key Rules or Details for 2013

Net Investment Income Tax (NIIT)

A new 3.8% NIIT began in 2013 for individuals with modified AGI above $200,000 (single) or $250,000 (married filing jointly).
This applied to rental, royalty, and other passive income reported on Schedule E and was computed separately on Form 8960.

Standard Mileage Rate

Landlords could deduct 56.5¢ per mile for 2013 business travel related to rental activities, or actual vehicle expenses.

Passive Activity Loss Rules

Rental real estate is typically passive, meaning losses can offset only passive income.
However, if you actively participated (approved tenants, managed repairs, etc.), you could deduct up to $25,000 in losses against regular income if your MAGI ≤ $100,000.
The allowance phased out between $100,000–$150,000.

At-Risk Rules

Losses were deductible only up to the amount you had at risk—money you could actually lose.
Qualified real estate loans were generally considered “at risk.”

Real Estate Professional Exception

If you worked more than 750 hours per year in real estate trades and spent over half your working time there, your rentals weren’t automatically passive, allowing full loss deductions.

Step-by-Step: Completing Schedule E (Rental Example)

Step 1: Property Information

List each property’s address and type (single-family, duplex, etc.).
Report rental vs. personal-use days—personal use over 14 days or 10% of rental days limits deductions.

Step 2: Report Income

Enter total rent received on line 3, including advance rent and kept security deposits.
Royalties go on line 4.

Step 3: Deduct Expenses

List expenses (lines 5–19): advertising, insurance, repairs, mortgage interest, property taxes, utilities, and depreciation (via Form 4562).

Step 4: Calculate Depreciation

Residential rental buildings depreciate over 27.5 years (straight-line method).
Depreciation is required—even if not claimed, the IRS assumes it was taken.

Step 5: Total and Net Income

Add up all expenses (line 20), then subtract from rental income (line 21).
If losses exceed income, check at-risk limits and Form 6198.

Step 6: Deductible Loss

If limited by passive activity rules, use Form 8582 to compute your deductible amount.
If eligible, enter up to $25,000 of active-participation loss.

Step 7: Combine Totals

Total all income and losses (line 26) and transfer the result to Form 1040, line 17.

Common Mistakes and How to Avoid Them

1. Repairs vs. Improvements

Improvements (new roof, remodel) must be capitalized and depreciated, not deducted as repairs.

2. Skipping Depreciation

You must claim it yearly—otherwise, IRS will “recapture” it when you sell.

3. Misreporting Personal Use

Vacation use must be prorated; “working vacations” generally count as personal.

4. Ignoring the QJV Election

Married couples jointly managing rentals could elect Qualified Joint Venture status, avoiding partnership filings.

5. Misunderstanding Passive Loss Limits

Losses over $25,000 (or over the income limit) are suspended until offset by passive income or property sale.

6. Poor Documentation

Keep receipts, mileage logs, and proof of payments for at least three years—longer if depreciating property.

What Happens After You File

Processing: Refunds (if any) arrived within 21 days (e-file) or 6–8 weeks (paper).
IRS Matching: Income is verified against Forms 1099-MISC and Schedule K-1s.
Loss Carryforwards: Suspended losses carry forward until you have passive income or sell the property.
Audit Risks: Common triggers include repeated large losses, vacation homes used personally, or mismatched income reports.
Recordkeeping: Keep 2013 records at least three years; depreciation records until three years after sale.

Frequently Asked Questions (FAQs)

Q1: Can I deduct rental losses if I have a full-time job?

Yes, if you actively participated and your MAGI ≤ $100,000, you could deduct up to $25,000 in losses.

Q2: What if I rented my vacation home for only 10 days?

If rented fewer than 15 days, don’t report the income—and you can’t deduct expenses (the “Augusta Rule”).

Q3: Do I need Schedule E if I received a Schedule K-1?

Yes, report your K-1 income on Schedule E, Part II or III, depending on the source.

Q4: Can I deduct the cost of improvements?

No, capitalize and depreciate them over time using Form 4562.

Q5: What’s the difference between Schedule E and Schedule C?

Schedule E: Passive rental activity (no substantial services)
Schedule C: Active business (e.g., bed & breakfast, Airbnb with cleaning/concierge services)

Q6: I’m a limited partner—where do I report this?

Report on Schedule E, Part II. Losses are passive and typically not deductible against ordinary income.

Q7: What if I forgot income or overstated expenses?

File Form 1040-X with a corrected Schedule E as soon as possible to reduce penalties and interest.

Additional Resources

Note: This guide reflects IRS rules in effect for the 2013 tax year. Always verify current requirements when filing or amending older returns.

Schedule E (Form 1040): Supplemental Income and Loss – 2013 Tax Year Guide

Frequently Asked Questions

Schedule E (Form 1040): Supplemental Income and Loss – 2013 Tax Year Guide

What the Form Is For

Schedule E (Form 1040) is used to report supplemental income and losses—that is, income not derived from wages or self-employment. For 2013, you used Schedule E to report income or losses from:

Rental real estate (houses, apartments, vacation homes, etc.)
Royalties (payments for the use of oil, gas, mineral rights, copyrights, or patents)
Partnerships and S corporations (your share of income or loss from business interests)
Estates and trusts (income you receive as a beneficiary)
REMICs (Real Estate Mortgage Investment Conduits)

Landlords most often use Part I to report rental property income and expenses, while investors use Parts II and III to report pass-through income from partnerships, S corporations, or trusts.

When You’d Use It (Late or Amended Filing)

Original Filing

Schedule E for 2013 was due with your Form 1040 by April 15, 2014, or October 15, 2014 if you filed for an extension.

Late Filing

If you never filed your 2013 return, you should do so immediately. While you can file late at any time, refund claims are limited to three years from the original due date (April 15, 2017, for 2013 returns).

Amended Returns

If you filed but made errors—such as missing rental income, forgetting expenses, or receiving a corrected Schedule K-1—you can file Form 1040-X with a corrected Schedule E.
You generally have three years from the date of filing or two years from the date you paid the tax (whichever is later) to amend. For most 2013 returns, this expired April 15, 2017.

Key Rules or Details for 2013

Net Investment Income Tax (NIIT)

A new 3.8% NIIT began in 2013 for individuals with modified AGI above $200,000 (single) or $250,000 (married filing jointly).
This applied to rental, royalty, and other passive income reported on Schedule E and was computed separately on Form 8960.

Standard Mileage Rate

Landlords could deduct 56.5¢ per mile for 2013 business travel related to rental activities, or actual vehicle expenses.

Passive Activity Loss Rules

Rental real estate is typically passive, meaning losses can offset only passive income.
However, if you actively participated (approved tenants, managed repairs, etc.), you could deduct up to $25,000 in losses against regular income if your MAGI ≤ $100,000.
The allowance phased out between $100,000–$150,000.

At-Risk Rules

Losses were deductible only up to the amount you had at risk—money you could actually lose.
Qualified real estate loans were generally considered “at risk.”

Real Estate Professional Exception

If you worked more than 750 hours per year in real estate trades and spent over half your working time there, your rentals weren’t automatically passive, allowing full loss deductions.

Step-by-Step: Completing Schedule E (Rental Example)

Step 1: Property Information

List each property’s address and type (single-family, duplex, etc.).
Report rental vs. personal-use days—personal use over 14 days or 10% of rental days limits deductions.

Step 2: Report Income

Enter total rent received on line 3, including advance rent and kept security deposits.
Royalties go on line 4.

Step 3: Deduct Expenses

List expenses (lines 5–19): advertising, insurance, repairs, mortgage interest, property taxes, utilities, and depreciation (via Form 4562).

Step 4: Calculate Depreciation

Residential rental buildings depreciate over 27.5 years (straight-line method).
Depreciation is required—even if not claimed, the IRS assumes it was taken.

Step 5: Total and Net Income

Add up all expenses (line 20), then subtract from rental income (line 21).
If losses exceed income, check at-risk limits and Form 6198.

Step 6: Deductible Loss

If limited by passive activity rules, use Form 8582 to compute your deductible amount.
If eligible, enter up to $25,000 of active-participation loss.

Step 7: Combine Totals

Total all income and losses (line 26) and transfer the result to Form 1040, line 17.

Common Mistakes and How to Avoid Them

1. Repairs vs. Improvements

Improvements (new roof, remodel) must be capitalized and depreciated, not deducted as repairs.

2. Skipping Depreciation

You must claim it yearly—otherwise, IRS will “recapture” it when you sell.

3. Misreporting Personal Use

Vacation use must be prorated; “working vacations” generally count as personal.

4. Ignoring the QJV Election

Married couples jointly managing rentals could elect Qualified Joint Venture status, avoiding partnership filings.

5. Misunderstanding Passive Loss Limits

Losses over $25,000 (or over the income limit) are suspended until offset by passive income or property sale.

6. Poor Documentation

Keep receipts, mileage logs, and proof of payments for at least three years—longer if depreciating property.

What Happens After You File

Processing: Refunds (if any) arrived within 21 days (e-file) or 6–8 weeks (paper).
IRS Matching: Income is verified against Forms 1099-MISC and Schedule K-1s.
Loss Carryforwards: Suspended losses carry forward until you have passive income or sell the property.
Audit Risks: Common triggers include repeated large losses, vacation homes used personally, or mismatched income reports.
Recordkeeping: Keep 2013 records at least three years; depreciation records until three years after sale.

Frequently Asked Questions (FAQs)

Q1: Can I deduct rental losses if I have a full-time job?

Yes, if you actively participated and your MAGI ≤ $100,000, you could deduct up to $25,000 in losses.

Q2: What if I rented my vacation home for only 10 days?

If rented fewer than 15 days, don’t report the income—and you can’t deduct expenses (the “Augusta Rule”).

Q3: Do I need Schedule E if I received a Schedule K-1?

Yes, report your K-1 income on Schedule E, Part II or III, depending on the source.

Q4: Can I deduct the cost of improvements?

No, capitalize and depreciate them over time using Form 4562.

Q5: What’s the difference between Schedule E and Schedule C?

Schedule E: Passive rental activity (no substantial services)
Schedule C: Active business (e.g., bed & breakfast, Airbnb with cleaning/concierge services)

Q6: I’m a limited partner—where do I report this?

Report on Schedule E, Part II. Losses are passive and typically not deductible against ordinary income.

Q7: What if I forgot income or overstated expenses?

File Form 1040-X with a corrected Schedule E as soon as possible to reduce penalties and interest.

Additional Resources

Note: This guide reflects IRS rules in effect for the 2013 tax year. Always verify current requirements when filing or amending older returns.

Frequently Asked Questions

Schedule E (Form 1040): Supplemental Income and Loss – 2013 Tax Year Guide

What the Form Is For

Schedule E (Form 1040) is used to report supplemental income and losses—that is, income not derived from wages or self-employment. For 2013, you used Schedule E to report income or losses from:

Rental real estate (houses, apartments, vacation homes, etc.)
Royalties (payments for the use of oil, gas, mineral rights, copyrights, or patents)
Partnerships and S corporations (your share of income or loss from business interests)
Estates and trusts (income you receive as a beneficiary)
REMICs (Real Estate Mortgage Investment Conduits)

Landlords most often use Part I to report rental property income and expenses, while investors use Parts II and III to report pass-through income from partnerships, S corporations, or trusts.

When You’d Use It (Late or Amended Filing)

Original Filing

Schedule E for 2013 was due with your Form 1040 by April 15, 2014, or October 15, 2014 if you filed for an extension.

Late Filing

If you never filed your 2013 return, you should do so immediately. While you can file late at any time, refund claims are limited to three years from the original due date (April 15, 2017, for 2013 returns).

Amended Returns

If you filed but made errors—such as missing rental income, forgetting expenses, or receiving a corrected Schedule K-1—you can file Form 1040-X with a corrected Schedule E.
You generally have three years from the date of filing or two years from the date you paid the tax (whichever is later) to amend. For most 2013 returns, this expired April 15, 2017.

Key Rules or Details for 2013

Net Investment Income Tax (NIIT)

A new 3.8% NIIT began in 2013 for individuals with modified AGI above $200,000 (single) or $250,000 (married filing jointly).
This applied to rental, royalty, and other passive income reported on Schedule E and was computed separately on Form 8960.

Standard Mileage Rate

Landlords could deduct 56.5¢ per mile for 2013 business travel related to rental activities, or actual vehicle expenses.

Passive Activity Loss Rules

Rental real estate is typically passive, meaning losses can offset only passive income.
However, if you actively participated (approved tenants, managed repairs, etc.), you could deduct up to $25,000 in losses against regular income if your MAGI ≤ $100,000.
The allowance phased out between $100,000–$150,000.

At-Risk Rules

Losses were deductible only up to the amount you had at risk—money you could actually lose.
Qualified real estate loans were generally considered “at risk.”

Real Estate Professional Exception

If you worked more than 750 hours per year in real estate trades and spent over half your working time there, your rentals weren’t automatically passive, allowing full loss deductions.

Step-by-Step: Completing Schedule E (Rental Example)

Step 1: Property Information

List each property’s address and type (single-family, duplex, etc.).
Report rental vs. personal-use days—personal use over 14 days or 10% of rental days limits deductions.

Step 2: Report Income

Enter total rent received on line 3, including advance rent and kept security deposits.
Royalties go on line 4.

Step 3: Deduct Expenses

List expenses (lines 5–19): advertising, insurance, repairs, mortgage interest, property taxes, utilities, and depreciation (via Form 4562).

Step 4: Calculate Depreciation

Residential rental buildings depreciate over 27.5 years (straight-line method).
Depreciation is required—even if not claimed, the IRS assumes it was taken.

Step 5: Total and Net Income

Add up all expenses (line 20), then subtract from rental income (line 21).
If losses exceed income, check at-risk limits and Form 6198.

Step 6: Deductible Loss

If limited by passive activity rules, use Form 8582 to compute your deductible amount.
If eligible, enter up to $25,000 of active-participation loss.

Step 7: Combine Totals

Total all income and losses (line 26) and transfer the result to Form 1040, line 17.

Common Mistakes and How to Avoid Them

1. Repairs vs. Improvements

Improvements (new roof, remodel) must be capitalized and depreciated, not deducted as repairs.

2. Skipping Depreciation

You must claim it yearly—otherwise, IRS will “recapture” it when you sell.

3. Misreporting Personal Use

Vacation use must be prorated; “working vacations” generally count as personal.

4. Ignoring the QJV Election

Married couples jointly managing rentals could elect Qualified Joint Venture status, avoiding partnership filings.

5. Misunderstanding Passive Loss Limits

Losses over $25,000 (or over the income limit) are suspended until offset by passive income or property sale.

6. Poor Documentation

Keep receipts, mileage logs, and proof of payments for at least three years—longer if depreciating property.

What Happens After You File

Processing: Refunds (if any) arrived within 21 days (e-file) or 6–8 weeks (paper).
IRS Matching: Income is verified against Forms 1099-MISC and Schedule K-1s.
Loss Carryforwards: Suspended losses carry forward until you have passive income or sell the property.
Audit Risks: Common triggers include repeated large losses, vacation homes used personally, or mismatched income reports.
Recordkeeping: Keep 2013 records at least three years; depreciation records until three years after sale.

Frequently Asked Questions (FAQs)

Q1: Can I deduct rental losses if I have a full-time job?

Yes, if you actively participated and your MAGI ≤ $100,000, you could deduct up to $25,000 in losses.

Q2: What if I rented my vacation home for only 10 days?

If rented fewer than 15 days, don’t report the income—and you can’t deduct expenses (the “Augusta Rule”).

Q3: Do I need Schedule E if I received a Schedule K-1?

Yes, report your K-1 income on Schedule E, Part II or III, depending on the source.

Q4: Can I deduct the cost of improvements?

No, capitalize and depreciate them over time using Form 4562.

Q5: What’s the difference between Schedule E and Schedule C?

Schedule E: Passive rental activity (no substantial services)
Schedule C: Active business (e.g., bed & breakfast, Airbnb with cleaning/concierge services)

Q6: I’m a limited partner—where do I report this?

Report on Schedule E, Part II. Losses are passive and typically not deductible against ordinary income.

Q7: What if I forgot income or overstated expenses?

File Form 1040-X with a corrected Schedule E as soon as possible to reduce penalties and interest.

Additional Resources

Note: This guide reflects IRS rules in effect for the 2013 tax year. Always verify current requirements when filing or amending older returns.

Frequently Asked Questions

Schedule E (Form 1040): Supplemental Income and Loss – 2013 Tax Year Guide

What the Form Is For

Schedule E (Form 1040) is used to report supplemental income and losses—that is, income not derived from wages or self-employment. For 2013, you used Schedule E to report income or losses from:

Rental real estate (houses, apartments, vacation homes, etc.)
Royalties (payments for the use of oil, gas, mineral rights, copyrights, or patents)
Partnerships and S corporations (your share of income or loss from business interests)
Estates and trusts (income you receive as a beneficiary)
REMICs (Real Estate Mortgage Investment Conduits)

Landlords most often use Part I to report rental property income and expenses, while investors use Parts II and III to report pass-through income from partnerships, S corporations, or trusts.

When You’d Use It (Late or Amended Filing)

Original Filing

Schedule E for 2013 was due with your Form 1040 by April 15, 2014, or October 15, 2014 if you filed for an extension.

Late Filing

If you never filed your 2013 return, you should do so immediately. While you can file late at any time, refund claims are limited to three years from the original due date (April 15, 2017, for 2013 returns).

Amended Returns

If you filed but made errors—such as missing rental income, forgetting expenses, or receiving a corrected Schedule K-1—you can file Form 1040-X with a corrected Schedule E.
You generally have three years from the date of filing or two years from the date you paid the tax (whichever is later) to amend. For most 2013 returns, this expired April 15, 2017.

Key Rules or Details for 2013

Net Investment Income Tax (NIIT)

A new 3.8% NIIT began in 2013 for individuals with modified AGI above $200,000 (single) or $250,000 (married filing jointly).
This applied to rental, royalty, and other passive income reported on Schedule E and was computed separately on Form 8960.

Standard Mileage Rate

Landlords could deduct 56.5¢ per mile for 2013 business travel related to rental activities, or actual vehicle expenses.

Passive Activity Loss Rules

Rental real estate is typically passive, meaning losses can offset only passive income.
However, if you actively participated (approved tenants, managed repairs, etc.), you could deduct up to $25,000 in losses against regular income if your MAGI ≤ $100,000.
The allowance phased out between $100,000–$150,000.

At-Risk Rules

Losses were deductible only up to the amount you had at risk—money you could actually lose.
Qualified real estate loans were generally considered “at risk.”

Real Estate Professional Exception

If you worked more than 750 hours per year in real estate trades and spent over half your working time there, your rentals weren’t automatically passive, allowing full loss deductions.

Step-by-Step: Completing Schedule E (Rental Example)

Step 1: Property Information

List each property’s address and type (single-family, duplex, etc.).
Report rental vs. personal-use days—personal use over 14 days or 10% of rental days limits deductions.

Step 2: Report Income

Enter total rent received on line 3, including advance rent and kept security deposits.
Royalties go on line 4.

Step 3: Deduct Expenses

List expenses (lines 5–19): advertising, insurance, repairs, mortgage interest, property taxes, utilities, and depreciation (via Form 4562).

Step 4: Calculate Depreciation

Residential rental buildings depreciate over 27.5 years (straight-line method).
Depreciation is required—even if not claimed, the IRS assumes it was taken.

Step 5: Total and Net Income

Add up all expenses (line 20), then subtract from rental income (line 21).
If losses exceed income, check at-risk limits and Form 6198.

Step 6: Deductible Loss

If limited by passive activity rules, use Form 8582 to compute your deductible amount.
If eligible, enter up to $25,000 of active-participation loss.

Step 7: Combine Totals

Total all income and losses (line 26) and transfer the result to Form 1040, line 17.

Common Mistakes and How to Avoid Them

1. Repairs vs. Improvements

Improvements (new roof, remodel) must be capitalized and depreciated, not deducted as repairs.

2. Skipping Depreciation

You must claim it yearly—otherwise, IRS will “recapture” it when you sell.

3. Misreporting Personal Use

Vacation use must be prorated; “working vacations” generally count as personal.

4. Ignoring the QJV Election

Married couples jointly managing rentals could elect Qualified Joint Venture status, avoiding partnership filings.

5. Misunderstanding Passive Loss Limits

Losses over $25,000 (or over the income limit) are suspended until offset by passive income or property sale.

6. Poor Documentation

Keep receipts, mileage logs, and proof of payments for at least three years—longer if depreciating property.

What Happens After You File

Processing: Refunds (if any) arrived within 21 days (e-file) or 6–8 weeks (paper).
IRS Matching: Income is verified against Forms 1099-MISC and Schedule K-1s.
Loss Carryforwards: Suspended losses carry forward until you have passive income or sell the property.
Audit Risks: Common triggers include repeated large losses, vacation homes used personally, or mismatched income reports.
Recordkeeping: Keep 2013 records at least three years; depreciation records until three years after sale.

Frequently Asked Questions (FAQs)

Q1: Can I deduct rental losses if I have a full-time job?

Yes, if you actively participated and your MAGI ≤ $100,000, you could deduct up to $25,000 in losses.

Q2: What if I rented my vacation home for only 10 days?

If rented fewer than 15 days, don’t report the income—and you can’t deduct expenses (the “Augusta Rule”).

Q3: Do I need Schedule E if I received a Schedule K-1?

Yes, report your K-1 income on Schedule E, Part II or III, depending on the source.

Q4: Can I deduct the cost of improvements?

No, capitalize and depreciate them over time using Form 4562.

Q5: What’s the difference between Schedule E and Schedule C?

Schedule E: Passive rental activity (no substantial services)
Schedule C: Active business (e.g., bed & breakfast, Airbnb with cleaning/concierge services)

Q6: I’m a limited partner—where do I report this?

Report on Schedule E, Part II. Losses are passive and typically not deductible against ordinary income.

Q7: What if I forgot income or overstated expenses?

File Form 1040-X with a corrected Schedule E as soon as possible to reduce penalties and interest.

Additional Resources

Note: This guide reflects IRS rules in effect for the 2013 tax year. Always verify current requirements when filing or amending older returns.

Frequently Asked Questions

Schedule E (Form 1040): Supplemental Income and Loss – 2013 Tax Year Guide

What the Form Is For

Schedule E (Form 1040) is used to report supplemental income and losses—that is, income not derived from wages or self-employment. For 2013, you used Schedule E to report income or losses from:

Rental real estate (houses, apartments, vacation homes, etc.)
Royalties (payments for the use of oil, gas, mineral rights, copyrights, or patents)
Partnerships and S corporations (your share of income or loss from business interests)
Estates and trusts (income you receive as a beneficiary)
REMICs (Real Estate Mortgage Investment Conduits)

Landlords most often use Part I to report rental property income and expenses, while investors use Parts II and III to report pass-through income from partnerships, S corporations, or trusts.

When You’d Use It (Late or Amended Filing)

Original Filing

Schedule E for 2013 was due with your Form 1040 by April 15, 2014, or October 15, 2014 if you filed for an extension.

Late Filing

If you never filed your 2013 return, you should do so immediately. While you can file late at any time, refund claims are limited to three years from the original due date (April 15, 2017, for 2013 returns).

Amended Returns

If you filed but made errors—such as missing rental income, forgetting expenses, or receiving a corrected Schedule K-1—you can file Form 1040-X with a corrected Schedule E.
You generally have three years from the date of filing or two years from the date you paid the tax (whichever is later) to amend. For most 2013 returns, this expired April 15, 2017.

Key Rules or Details for 2013

Net Investment Income Tax (NIIT)

A new 3.8% NIIT began in 2013 for individuals with modified AGI above $200,000 (single) or $250,000 (married filing jointly).
This applied to rental, royalty, and other passive income reported on Schedule E and was computed separately on Form 8960.

Standard Mileage Rate

Landlords could deduct 56.5¢ per mile for 2013 business travel related to rental activities, or actual vehicle expenses.

Passive Activity Loss Rules

Rental real estate is typically passive, meaning losses can offset only passive income.
However, if you actively participated (approved tenants, managed repairs, etc.), you could deduct up to $25,000 in losses against regular income if your MAGI ≤ $100,000.
The allowance phased out between $100,000–$150,000.

At-Risk Rules

Losses were deductible only up to the amount you had at risk—money you could actually lose.
Qualified real estate loans were generally considered “at risk.”

Real Estate Professional Exception

If you worked more than 750 hours per year in real estate trades and spent over half your working time there, your rentals weren’t automatically passive, allowing full loss deductions.

Step-by-Step: Completing Schedule E (Rental Example)

Step 1: Property Information

List each property’s address and type (single-family, duplex, etc.).
Report rental vs. personal-use days—personal use over 14 days or 10% of rental days limits deductions.

Step 2: Report Income

Enter total rent received on line 3, including advance rent and kept security deposits.
Royalties go on line 4.

Step 3: Deduct Expenses

List expenses (lines 5–19): advertising, insurance, repairs, mortgage interest, property taxes, utilities, and depreciation (via Form 4562).

Step 4: Calculate Depreciation

Residential rental buildings depreciate over 27.5 years (straight-line method).
Depreciation is required—even if not claimed, the IRS assumes it was taken.

Step 5: Total and Net Income

Add up all expenses (line 20), then subtract from rental income (line 21).
If losses exceed income, check at-risk limits and Form 6198.

Step 6: Deductible Loss

If limited by passive activity rules, use Form 8582 to compute your deductible amount.
If eligible, enter up to $25,000 of active-participation loss.

Step 7: Combine Totals

Total all income and losses (line 26) and transfer the result to Form 1040, line 17.

Common Mistakes and How to Avoid Them

1. Repairs vs. Improvements

Improvements (new roof, remodel) must be capitalized and depreciated, not deducted as repairs.

2. Skipping Depreciation

You must claim it yearly—otherwise, IRS will “recapture” it when you sell.

3. Misreporting Personal Use

Vacation use must be prorated; “working vacations” generally count as personal.

4. Ignoring the QJV Election

Married couples jointly managing rentals could elect Qualified Joint Venture status, avoiding partnership filings.

5. Misunderstanding Passive Loss Limits

Losses over $25,000 (or over the income limit) are suspended until offset by passive income or property sale.

6. Poor Documentation

Keep receipts, mileage logs, and proof of payments for at least three years—longer if depreciating property.

What Happens After You File

Processing: Refunds (if any) arrived within 21 days (e-file) or 6–8 weeks (paper).
IRS Matching: Income is verified against Forms 1099-MISC and Schedule K-1s.
Loss Carryforwards: Suspended losses carry forward until you have passive income or sell the property.
Audit Risks: Common triggers include repeated large losses, vacation homes used personally, or mismatched income reports.
Recordkeeping: Keep 2013 records at least three years; depreciation records until three years after sale.

Frequently Asked Questions (FAQs)

Q1: Can I deduct rental losses if I have a full-time job?

Yes, if you actively participated and your MAGI ≤ $100,000, you could deduct up to $25,000 in losses.

Q2: What if I rented my vacation home for only 10 days?

If rented fewer than 15 days, don’t report the income—and you can’t deduct expenses (the “Augusta Rule”).

Q3: Do I need Schedule E if I received a Schedule K-1?

Yes, report your K-1 income on Schedule E, Part II or III, depending on the source.

Q4: Can I deduct the cost of improvements?

No, capitalize and depreciate them over time using Form 4562.

Q5: What’s the difference between Schedule E and Schedule C?

Schedule E: Passive rental activity (no substantial services)
Schedule C: Active business (e.g., bed & breakfast, Airbnb with cleaning/concierge services)

Q6: I’m a limited partner—where do I report this?

Report on Schedule E, Part II. Losses are passive and typically not deductible against ordinary income.

Q7: What if I forgot income or overstated expenses?

File Form 1040-X with a corrected Schedule E as soon as possible to reduce penalties and interest.

Additional Resources

Note: This guide reflects IRS rules in effect for the 2013 tax year. Always verify current requirements when filing or amending older returns.

Frequently Asked Questions

Schedule E (Form 1040): Supplemental Income and Loss – 2013 Tax Year Guide

What the Form Is For

Schedule E (Form 1040) is used to report supplemental income and losses—that is, income not derived from wages or self-employment. For 2013, you used Schedule E to report income or losses from:

Rental real estate (houses, apartments, vacation homes, etc.)
Royalties (payments for the use of oil, gas, mineral rights, copyrights, or patents)
Partnerships and S corporations (your share of income or loss from business interests)
Estates and trusts (income you receive as a beneficiary)
REMICs (Real Estate Mortgage Investment Conduits)

Landlords most often use Part I to report rental property income and expenses, while investors use Parts II and III to report pass-through income from partnerships, S corporations, or trusts.

When You’d Use It (Late or Amended Filing)

Original Filing

Schedule E for 2013 was due with your Form 1040 by April 15, 2014, or October 15, 2014 if you filed for an extension.

Late Filing

If you never filed your 2013 return, you should do so immediately. While you can file late at any time, refund claims are limited to three years from the original due date (April 15, 2017, for 2013 returns).

Amended Returns

If you filed but made errors—such as missing rental income, forgetting expenses, or receiving a corrected Schedule K-1—you can file Form 1040-X with a corrected Schedule E.
You generally have three years from the date of filing or two years from the date you paid the tax (whichever is later) to amend. For most 2013 returns, this expired April 15, 2017.

Key Rules or Details for 2013

Net Investment Income Tax (NIIT)

A new 3.8% NIIT began in 2013 for individuals with modified AGI above $200,000 (single) or $250,000 (married filing jointly).
This applied to rental, royalty, and other passive income reported on Schedule E and was computed separately on Form 8960.

Standard Mileage Rate

Landlords could deduct 56.5¢ per mile for 2013 business travel related to rental activities, or actual vehicle expenses.

Passive Activity Loss Rules

Rental real estate is typically passive, meaning losses can offset only passive income.
However, if you actively participated (approved tenants, managed repairs, etc.), you could deduct up to $25,000 in losses against regular income if your MAGI ≤ $100,000.
The allowance phased out between $100,000–$150,000.

At-Risk Rules

Losses were deductible only up to the amount you had at risk—money you could actually lose.
Qualified real estate loans were generally considered “at risk.”

Real Estate Professional Exception

If you worked more than 750 hours per year in real estate trades and spent over half your working time there, your rentals weren’t automatically passive, allowing full loss deductions.

Step-by-Step: Completing Schedule E (Rental Example)

Step 1: Property Information

List each property’s address and type (single-family, duplex, etc.).
Report rental vs. personal-use days—personal use over 14 days or 10% of rental days limits deductions.

Step 2: Report Income

Enter total rent received on line 3, including advance rent and kept security deposits.
Royalties go on line 4.

Step 3: Deduct Expenses

List expenses (lines 5–19): advertising, insurance, repairs, mortgage interest, property taxes, utilities, and depreciation (via Form 4562).

Step 4: Calculate Depreciation

Residential rental buildings depreciate over 27.5 years (straight-line method).
Depreciation is required—even if not claimed, the IRS assumes it was taken.

Step 5: Total and Net Income

Add up all expenses (line 20), then subtract from rental income (line 21).
If losses exceed income, check at-risk limits and Form 6198.

Step 6: Deductible Loss

If limited by passive activity rules, use Form 8582 to compute your deductible amount.
If eligible, enter up to $25,000 of active-participation loss.

Step 7: Combine Totals

Total all income and losses (line 26) and transfer the result to Form 1040, line 17.

Common Mistakes and How to Avoid Them

1. Repairs vs. Improvements

Improvements (new roof, remodel) must be capitalized and depreciated, not deducted as repairs.

2. Skipping Depreciation

You must claim it yearly—otherwise, IRS will “recapture” it when you sell.

3. Misreporting Personal Use

Vacation use must be prorated; “working vacations” generally count as personal.

4. Ignoring the QJV Election

Married couples jointly managing rentals could elect Qualified Joint Venture status, avoiding partnership filings.

5. Misunderstanding Passive Loss Limits

Losses over $25,000 (or over the income limit) are suspended until offset by passive income or property sale.

6. Poor Documentation

Keep receipts, mileage logs, and proof of payments for at least three years—longer if depreciating property.

What Happens After You File

Processing: Refunds (if any) arrived within 21 days (e-file) or 6–8 weeks (paper).
IRS Matching: Income is verified against Forms 1099-MISC and Schedule K-1s.
Loss Carryforwards: Suspended losses carry forward until you have passive income or sell the property.
Audit Risks: Common triggers include repeated large losses, vacation homes used personally, or mismatched income reports.
Recordkeeping: Keep 2013 records at least three years; depreciation records until three years after sale.

Frequently Asked Questions (FAQs)

Q1: Can I deduct rental losses if I have a full-time job?

Yes, if you actively participated and your MAGI ≤ $100,000, you could deduct up to $25,000 in losses.

Q2: What if I rented my vacation home for only 10 days?

If rented fewer than 15 days, don’t report the income—and you can’t deduct expenses (the “Augusta Rule”).

Q3: Do I need Schedule E if I received a Schedule K-1?

Yes, report your K-1 income on Schedule E, Part II or III, depending on the source.

Q4: Can I deduct the cost of improvements?

No, capitalize and depreciate them over time using Form 4562.

Q5: What’s the difference between Schedule E and Schedule C?

Schedule E: Passive rental activity (no substantial services)
Schedule C: Active business (e.g., bed & breakfast, Airbnb with cleaning/concierge services)

Q6: I’m a limited partner—where do I report this?

Report on Schedule E, Part II. Losses are passive and typically not deductible against ordinary income.

Q7: What if I forgot income or overstated expenses?

File Form 1040-X with a corrected Schedule E as soon as possible to reduce penalties and interest.

Additional Resources

Note: This guide reflects IRS rules in effect for the 2013 tax year. Always verify current requirements when filing or amending older returns.

Schedule E (Form 1040): Supplemental Income and Loss – 2013 Tax Year Guide

What the Form Is For

When You’d Use It (Late or Amended Filing)

Original Filing

Late Filing

Amended Returns

Key Rules or Details for 2013

Net Investment Income Tax (NIIT)

Standard Mileage Rate

Passive Activity Loss Rules

At-Risk Rules

Real Estate Professional Exception

Step-by-Step: Completing Schedule E (Rental Example)

Step 1: Property Information

Step 2: Report Income

Step 3: Deduct Expenses

Step 4: Calculate Depreciation

Step 5: Total and Net Income

Step 6: Deductible Loss

Step 7: Combine Totals

Common Mistakes and How to Avoid Them

1. Repairs vs. Improvements

2. Skipping Depreciation

3. Misreporting Personal Use

4. Ignoring the QJV Election

5. Misunderstanding Passive Loss Limits

6. Poor Documentation

What Happens After You File

Frequently Asked Questions (FAQs)

Q1: Can I deduct rental losses if I have a full-time job?

Q2: What if I rented my vacation home for only 10 days?

Q3: Do I need Schedule E if I received a Schedule K-1?

Q4: Can I deduct the cost of improvements?

Q5: What’s the difference between Schedule E and Schedule C?

Q6: I’m a limited partner—where do I report this?

Q7: What if I forgot income or overstated expenses?

Additional Resources

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Frequently Asked Questions

Related Articles

Schedule E (Form 1040): Supplemental Income and Loss – 2013 Tax Year Guide

What the Form Is For

When You’d Use It (Late or Amended Filing)

Original Filing

Late Filing

Amended Returns

Key Rules or Details for 2013

Net Investment Income Tax (NIIT)

Standard Mileage Rate

Passive Activity Loss Rules

At-Risk Rules

Real Estate Professional Exception

Step-by-Step: Completing Schedule E (Rental Example)

Step 1: Property Information

Step 2: Report Income

Step 3: Deduct Expenses

Step 4: Calculate Depreciation

Step 5: Total and Net Income

Step 6: Deductible Loss

Step 7: Combine Totals

Common Mistakes and How to Avoid Them

1. Repairs vs. Improvements

2. Skipping Depreciation

3. Misreporting Personal Use

4. Ignoring the QJV Election

5. Misunderstanding Passive Loss Limits

6. Poor Documentation

What Happens After You File

Frequently Asked Questions (FAQs)

Q1: Can I deduct rental losses if I have a full-time job?

Q2: What if I rented my vacation home for only 10 days?

Q3: Do I need Schedule E if I received a Schedule K-1?

Q4: Can I deduct the cost of improvements?

Q5: What’s the difference between Schedule E and Schedule C?

Q6: I’m a limited partner—where do I report this?

Q7: What if I forgot income or overstated expenses?

Additional Resources

Frequently Asked Questions

Schedule E (Form 1040): Supplemental Income and Loss – 2013 Tax Year Guide

What the Form Is For