PART III. Carryover of Unallowed Expenses to Next Year

7a. Operating expenses to be carried over to next year. Subtract line 4f from line 4e . . . . . . . . . . . . . . . . . . . . . . 7a.

b. Excess casualty and theft losses and depreciation to be carried over to next year. Subtract line 6e from line 6d . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . b.

Publication 527 (2025) Chapter 5 Personal Use of Dwelling Unit (Including

Vacation Home)

29

Worksheet 5-1 Instructions.

Worksheet for Figuring Rental Deductions for a Dwelling Unit Used as a Home

Keep for Your Records

Caution. Use the percentage determined in Part I, line F, to figure the rental portions to enter on lines 2a–2c, 4a–4c, and 6a–6b of Part II.

Line 2a. If you are claiming the standard deduction, do not report an amount on line 2a; instead, report the rental portion of your mortgage interest on line 4b.

If you are itemizing your deductions on Schedule A, figure the amount of mortgage interest to include on line 2a by using the following steps.

Step 1. Treat all the mortgage interest you paid for mortgages secured by your home(s) as a personal expense and figure the amount that would be deductible as an itemized expense on Schedule A. See Pub. 936 for more information about figuring the home mortgage interest deduction and the limits that may apply.

Step 2. Include on line 2a the rental portion of deductible mortgage interest figured in Step 1 that is attributable to the home you are renting.

Note: Be sure to claim only the personal portion of your deductible mortgage interest on Schedule A. The personal portion of mortgage interest on the dwelling unit doesn’t include the rental portion you reported on line 2a of this Worksheet 5-1 or any portion that you deducted on other forms, such as Schedule C or F. Line 2b. If you are claiming the standard deduction, do not report an amount on line 2b; instead, report the rental portion of your real estate taxes on line 4c. If you are itemizing your deductions on Schedule A, figure the amount to report on line 2b by using the following steps. Step 1. If the total of your state and local income (or, if elected on your Schedule A, general sales) taxes, real estate taxes, and personal property taxes is not more than $40,000 ($20,000 if married filing separately), enter the rental portion of the real estate taxes attributable to the dwelling unit you are renting on line 2b. Step 2. If you do not meet the condition of Step 1, use the following worksheet to figure the amount to include on line 2b.

Line 2b Worksheet

1. Enter your state and local income taxes (or, if you elect on Schedule A, your state and local general sales taxes) that are personal expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 2. Enter all the state and local real estate taxes you paid on the dwelling unit you are renting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3. Enter any other state and local real estate taxes you paid that are a personal expense and not included on line 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4. Enter your state and local personal property taxes that are a personal expense . . . . . . . 5. Add lines 1 through 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6. Multiply line 2 by the percentage of expenses allowed for rental (Part I, line F) . . . . . . . . 7. Subtract line 6 from line 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8. Subtract line 7 from $40,000 ($20,000 if married filing separately). If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9. Real estate taxes reported on line 2b. Enter the smaller of line 6 or line 8 here and on line 2b . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10. Excess real estate taxes reported on line 4c. Subtract line 9 from line 6 . . . . . . . . . . Note: Be sure to report only the personal portion of your real estate taxes on line 5b of Schedule A. The personal portion of real estate taxes on the dwelling unit doesn’t include the rental portion you reported on line 2b of this Worksheet 5-1 or any portion that you deducted on other forms, such as Schedule C or F.

Line 2c. If you are claiming the standard deduction and you are not increasing your standard deduction by a net qualified disaster loss, do not report an amount on line 2c; instead, report the rental portion of your casualty losses on line 6a. If you are itemizing your deductions on Schedule A or filing a Schedule A to increase your standard deduction by a net qualified disaster loss, figure the amount to report on line 2c by using the following steps. Step 1. Complete a worksheet version of Section A of Form 4684 treating all your casualty losses (and gains) as personal expenses. If you are itemizing your deductions, when completing line 17 of this worksheet version of Form 4684, enter 10% of your adjusted gross income figured without your rental income and expenses from the dwelling unit. Don’t file this worksheet version of Form 4684; instead, keep it for your records. You will complete a separate Form 4684 to attach to your return using only the personal portion of your casualty losses (and gains) for Section A. Step 2. Include on line 2c the rental portion of the loss amounts from lines 15 and 18 of this worksheet version of Form 4684 that are the result of a federally declared disaster. If you are claiming an increased standard deduction instead of itemizing your deductions, only use the rental portion of a net qualified disaster loss on line 15 of the worksheet version of Form 4684 for this Step 2.

Note: Be sure to use only the personal portion of your casualty losses (and gains) when completing Section A of the separate Form 4684 you attach to your return. The separate Form 4684 you attach to your return is used to figure the casualty losses you can include on line 15 of Schedule A and the net qualified disaster losses you can include on line 16 of Schedule A. You will report casualty and theft losses attributable to your rental activity in Section B of the separate Form 4684 you attach to your return.

30 Chapter 5 Personal Use of Dwelling Unit (Including

Vacation Home)

Publication 527 (2025)

Worksheet 5-1 Instructions— Continued

Line 2d. Enter the total of your rental expenses that are directly related only to the rental activity. These include interest on loans used for rental activities other than to buy, build, or improve the dwelling unit. Also, include rental agency fees, advertising, office supplies, and depreciation on office equipment used in your rental activity.

Line 2e. You can deduct the amounts on lines 2a, 2b, 2c, and 2d as rental expenses even if your rental expenses are more than your rental income. Enter the amounts on lines 2a, 2b, and 2d on the appropriate lines of Schedule E. Include the amount from line 2c with the casualty loss from line 6e, if any, in Section B of Form 4684, on line 27, and enter “See attached statement” above line 27. Attach a statement to your tax return showing how you calculated the deductible loss (you can use the worksheet as your attachment).

Line 4b. If you are claiming the standard deduction, enter the rental portion of all the home mortgage interest paid for loans used to buy, build, or substantially improve the dwelling unit you are renting on line 4b. Do not include mortgage interest on a loan that did not benefit the dwelling unit (for example, a home equity loan used to pay off credit card bills, to buy a car, or to pay tuition costs).

If you are itemizing your deductions and the amount you figured in Step 1 under Line 2a was less than the full amount of interest you paid because of the limits on deducting home mortgage interest as a personal expense, include on line 4b the rental portion of the excess attributable to the loans used to buy, build, or substantially improve the dwelling unit you rented.

Line 4c . If you are claiming the standard deduction, enter the rental portion of all the real estate taxes paid on the dwelling unit you rented.

If you are itemizing your deductions and you used the Line 2b Worksheet to figure the amount to include on line 2b, then include the amount from line 10 of the Line 2b Worksheet on line 4c; otherwise, do not enter an amount on line 4c.

Line 4f. You can deduct the amounts on lines 4a, 4b, 4c, and 4d as rental expenses on Schedule E only to the extent they aren’t more than the amount on line 4f.*

Line 6a. If you are claiming the standard deduction and not increasing it by a net qualified disaster loss, enter the rental portion of all casualty losses attributable to the dwelling unit you rented. If you are itemizing your deductions on Schedule A or filing a Schedule A to increase your standard deduction by a net qualified disaster loss, enter the rental portion of the casualty losses attributable to the dwelling unit you rented that are in excess of the amount you figured on lines 15 and 18 of your worksheet version of Form 4684.

Line 6e. You can deduct the amounts on lines 6a, 6b, and 6c as rental expenses only to the extent they aren’t more than the amount on line 6e.* Include the depreciation from line 6e, if any, on the appropriate line of Schedule E. Include the casualty loss from line 6e, if any, with the casualty loss from line 2c in Section B of Form 4684, on line 27, and enter “See attached statement” above line 27. Attach a statement to your tax return showing how you calculated the deductible loss (you can use the worksheet as your attachment).

*** Allocating the limited deduction.** If you can’t deduct all of the amount on line 4e or 6d this year, you can allocate the allowable deduction in any way you wish among the expenses included on line 4e or 6d. Enter the amount you allocate to each expense on the appropriate line of Schedule E, Part I, or if a casualty loss, as instructed earlier on Form 4684, line 27.

Publication 527 (2025) Chapter 5 Personal Use of Dwelling Unit (Including

Vacation Home)

31

If you have questions about a tax issue; need help preparing your tax return; or want to download free publications, forms, or instructions, go to IRS.gov to find resources that can help you right away.

Tax reform. Tax reform legislation impacting federal taxes, credits, and deductions was enacted in P.L. 119-21, commonly known as the One Big Beautiful Bill Act, on July 4, 2025. Go to IRS.gov/OBBB for more information and updates on how this legislation affects your taxes.

Preparing and filing your tax return. After receiving all your wage and earnings statements (Forms W-2, W-2G, 1099-R, 1099-MISC, 1099-NEC, etc.); unemployment compensation statements (by mail or in a digital format) or other government payment statements (Form 1099-G); and interest, dividend, and retirement statements from banks and investment firms (Forms 1099), you have several options to choose from to prepare and file your tax return. You can prepare the tax return yourself, see if you qualify for free tax preparation, or hire a tax professional to prepare your return.

Free options for tax preparation. Your options for preparing and filing your return online or in your local community, if you qualify, include the following.

• Free File. This program lets you prepare and file your federal individual income tax return for free using software or Free File Fillable Forms. However, state tax preparation may not be available through Free File. Go to IRS.gov/FreeFile to see if you qualify for free online federal tax preparation, e-filing, and direct deposit or payment options.

• VITA. The Volunteer Income Tax Assistance (VITA) program offers free tax help to people with low-to-moderate incomes, persons with disabilities, and limited-English-speaking taxpayers who need help preparing their own tax returns. Go to IRS.gov/ VITA, download the free IRS2Go app, or call

800-906-9887 for information on free tax return prepa- ration.

• TCE. The Tax Counseling for the Elderly (TCE) program offers free tax help for all taxpayers, particularly those who are 60 years of age and older. TCE volunteers specialize in answering questions about pensions and retirement-related issues unique to seniors. Go to IRS.gov/TCE or download the free IRS2Go app for information on free tax return preparation.

• MilTax. Members of the U.S. Armed Forces and qualified veterans may use MilTax, a free tax service offered by the Department of Defense through Military OneSource. For more information, go to MilitaryOneSource ( MilitaryOneSource.mil/MilTax ).

Also, the IRS offers Free Fillable Forms, which can be completed online and then e-filed regardless of income.

Using online tools to help prepare your return. Go to IRS.gov/Tools for the following.

• The Earned Income Tax Credit Assistant ( IRS.gov/ EITCAssistant ) determines if you’re eligible for the

earned income credit (EITC).

• The Online EIN Application ( IRS.gov/EIN ) helps you get an employer identification number (EIN) at no cost.

• The Tax Withholding Estimator ( IRS.gov/W4App ) makes it easier for you to estimate the federal income tax you want your employer to withhold from your paycheck. This is tax withholding. See how your withholding affects your refund, take-home pay, or tax due.

• The Sales Tax Deduction Calculator ( IRS.gov/ SalesTax ) figures the amount you can claim if you

itemize deductions on Schedule A (Form 1040).

Getting answers to your tax questions. On IRS.gov, you can get up-to-date information on current events and changes in tax law.

• IRS.gov/Help : A variety of tools to help you get an-

swers to some of the most common tax questions.

• IRS.gov/ITA : The Interactive Tax Assistant, a tool that

will ask you questions and, based on your input, pro- vide answers on a number of tax topics.

• IRS.gov/Forms : Find forms, instructions, and publications. You will find details on the most recent tax changes and interactive links to help you find answers to your questions.

• You may also be able to access tax information in your e-filing software.

Need someone to prepare your tax return? There are various types of tax return preparers, including enrolled agents, certified public accountants (CPAs), accountants, and many others who don’t have professional credentials. If you choose to have someone prepare your tax return, choose that preparer wisely. A paid tax preparer is:

• Primarily responsible for the overall substantive accuracy of your return,

• Required to sign the return, and

• Required to include their preparer tax identification number (PTIN).

Although the tax preparer always signs the return,

CAUTION information required for the preparer to accurately

prepare your return and for the accuracy of every item re- ported on the return. Anyone paid to prepare tax returns for others should have a thorough understanding of tax matters. For more information on how to choose a tax pre- parer, go to Tips for Choosing a Tax Preparer on IRS.gov.

32 Chapter 6 How To Get Tax Help Publication 527 (2025)

Employers can register to use Business Services On- line. The Social Security Administration (SSA) offers online service at SSA.gov/employer for fast, free, and secure W-2 filing options to CPAs, accountants, enrolled agents, and individuals who process Form W-2, Wage and Tax Statement; and Form W-2c, Corrected Wage and Tax Statement.

Business tax account. If you are a sole proprietor, a partnership, an S corporation, a C corporation, or a single-member limited liability company (LLC), you can view your tax information on record with the IRS and do more with a business tax account. Go to IRS.gov/ BusinessAccount for more information.

IRS social media. Go to IRS.gov/SocialMedia to see the various social media tools the IRS uses to share the latest information on tax changes, scam alerts, initiatives, products, and services. At the IRS, privacy and security are our highest priority. We use these tools to share public information with you. Don’t post your social security number (SSN) or other confidential information on social media sites. Always protect your identity when using any social networking site.

The following IRS YouTube channels provide short, informative videos on various tax-related topics in English and ASL.

• Youtube.com/irsvideos .

• Youtube.com/irsvideosASL .

Online tax information in other languages. You can find information on IRS.gov/MyLanguage if English isn’t your native language.

Over-the-Phone Interpreter (OPI) Service. The IRS offers the OPI Service to taxpayers needing language interpretation. The OPI Service is available at Taxpayer Assistance Centers (TACs), most IRS offices, and every VITA/TCE tax return site. This service is available in Spanish, Mandarin, Cantonese, Korean, Vietnamese, Russian, and Haitian Creole.

Accessibility Helpline available for taxpayers with disabilities. Taxpayers who need information about accessibility services can call 833-690-0598. The Accessibility Helpline can answer questions related to current and future accessibility products and services available in alternative media formats (for example, braille-ready, large print, audio, etc.). The Accessibility Helpline does not have access to your IRS account. For help with tax law, refunds, or account-related issues, go to IRS.gov/ LetUsHelp .

Alternative media preference. Form 9000, Alternative Media Preference, or Form 9000(SP) allows you to elect to

receive certain types of written correspondence in the following formats.

• Standard Print.

• Large Print.

• Braille.

• Audio (MP3).

• Plain Text File (TXT).

• Braille-Ready File (BRF).

Disasters. Go to IRS.gov/DisasterRelief to review the available disaster tax relief.

Getting tax forms and publications. Go to IRS.gov/ Forms to view, download, or print all the forms, instructions, and publications you may need. Or you can go to IRS.gov/OrderForms to place an order.

Mobile-friendly forms. You’ll need an IRS Online Account (OLA) to complete mobile-friendly forms that require signatures. You’ll have the option to submit your form(s) online or download a copy for mailing. You’ll need scans of your documents to support your submission. Go to IRS.gov/MobileFriendlyForms for more information.

Getting tax publications and instructions in eBook format. Download and view most tax publications and instructions (including the Instructions for Form 1040) on mobile devices as eBooks at IRS.gov/eBooks .

IRS eBooks have been tested using Apple’s iBooks for iPad. Our eBooks haven’t been tested on other dedicated eBook readers, and eBook functionality may not operate as intended.

Access your online account (individual taxpayers only). Go to IRS.gov/Account to securely access information about your federal tax account.

• View the amount you owe and a breakdown by tax year.

• See payment plan details or apply for a new payment plan.

• Make a payment or view 5 years of payment history and any pending or scheduled payments.

• Access your tax records, including key data from your most recent tax return, and transcripts.

• View digital copies of select notices from the IRS.

• Approve or reject authorization requests from tax professionals.

Get a transcript of your return. With an online account, you can access a variety of information to help you during the filing season. You can get a transcript, review your most recently filed tax return, and get your adjusted gross income. Create or access your online account at IRS.gov/ Account .

Tax Pro Account. This tool lets your tax professional submit an authorization request to access your individual

Publication 527 (2025) Chapter 6 How To Get Tax Help 33

taxpayer IRS OLA. For more information, go to IRS.gov/ TaxProAccount .

Using direct deposit. The safest and easiest way to receive a tax refund is to e-file and choose direct deposit, which securely and electronically transfers your refund directly into your financial account. Direct deposit also avoids the possibility that your check could be lost, stolen, destroyed, or returned undeliverable to the IRS. Eight in 10 taxpayers use direct deposit to receive their refunds. If you don’t have a bank account, go to IRS.gov/ DirectDeposit for more information on where to find a bank or credit union that can open an account online.

Reporting and resolving your tax-related identity theft issues.

• Tax-related identity theft happens when someone steals your personal information to commit tax fraud. Your taxes can be affected if your SSN is used to file a fraudulent return or to claim a refund or credit.

• The IRS doesn’t initiate contact with taxpayers by email, text messages (including shortened links), telephone calls, or social media channels to request or verify personal or financial information. This includes requests for personal identification numbers (PINs), passwords, or similar information for credit cards, banks, or other financial accounts.

• Go to IRS.gov/IdentityTheft, the IRS Identity Theft Central webpage, for information on identity theft and data security protection for taxpayers, tax professionals, and businesses. If your SSN has been lost or stolen or you suspect you’re a victim of tax-related identity theft, you can learn what steps you should take.

• Get an Identity Protection PIN (IP PIN). IP PINs are six-digit numbers assigned to taxpayers to help prevent the misuse of their SSNs on fraudulent federal income tax returns. When you have an IP PIN, it prevents someone else from filing a tax return with your SSN. To learn more, go to IRS.gov/IPPIN .

Ways to check on the status of your refund.

• Go to IRS.gov/Refunds .

• Download the official IRS2Go app to your mobile device to check your refund status.

• Call the automated refund hotline at 800-829-1954.

The IRS can’t issue refunds before mid-February

CAUTION child tax credit (ACTC). This applies to the entire

refund, not just the portion associated with these credits.

Making a tax payment. The IRS recommends paying electronically whenever possible. Options to pay electronically are included in the list below. Payments of U.S. tax must be remitted to the IRS in U.S. dollars. Digital assets are not accepted. Go to IRS.gov/Payments for information

on how to make a payment using any of the following options.

• IRS Direct Pay : Pay taxes from your bank account. It’s

free and secure, and no sign-in is required. You can change or cancel within 2 days of scheduled payment.

• Debit Card, Credit Card, or Digital Wallet : Choose an

approved payment processor to pay online or by phone.

• Electronic Funds Withdrawal : Schedule a payment

when filing your federal taxes using tax return prepara- tion software or through a tax professional.

• Electronic Federal Tax Payment System : This is the

best option for businesses. Enrollment is required.

• Check or Money Order : Mail your payment to the ad-

dress listed on the notice or instructions.

• Cash : You may be able to pay your taxes with cash at

a participating retail store.

• Same-Day Wire : You may be able to do same-day

wire from your financial institution. Contact your finan- cial institution for availability, cost, and time frames.

Note: The IRS uses the latest encryption technology to ensure that the electronic payments you make online, by phone, or from a mobile device using the IRS2Go app are safe and secure. Paying electronically is quick and easy.

What if I can’t pay now? Go to IRS.gov/Payments for more information about your options.

• Apply for an online payment agreement ( IRS.gov/ OPA ) to meet your tax obligation in monthly installments if you can’t pay your taxes in full today. Once you complete the online process, you will receive immediate notification of whether your agreement has been approved.

• Use the Offer in Compromise Pre-Qualifier to see if you can settle your tax debt for less than the full amount you owe. For more information on the Offer in Compromise program, go to IRS.gov/OIC .

Filing an amended return. Go to IRS.gov/1040X for information and updates.

Checking the status of your amended return. Go to IRS.gov/WMAR to track the status of Form 1040-X amended returns.

Understanding an IRS notice or letter you’ve re- ceived. Go to IRS.gov/Notices to find additional information about responding to an IRS notice or letter.

IRS Document Upload Tool. You may be able to use the Document Upload Tool to respond digitally to eligible IRS notices and letters by securely uploading required documents online through IRS.gov. For more information, go to IRS.gov/DUT .

CAUTION

It can take up to 3 weeks from the date you filed your amended return for it to show up in our sys- tem, and processing it can take up to 16 weeks.

34 Chapter 6 How To Get Tax Help Publication 527 (2025)

Schedule LEP. You can use Schedule LEP (Form 1040), Request for Change in Language Preference, to state a preference to receive notices, letters, or other written communications from the IRS in an alternative language. You may not immediately receive written communications in the requested language. The IRS’s commitment to LEP taxpayers is part of a multi-year timeline that began providing translations in 2023. You will continue to receive communications, including notices and letters, in English until they are translated to your preferred language.

Contacting your local TAC. Keep in mind, many questions can be answered on IRS.gov without visiting a TAC. Go to IRS.gov/LetUsHelp for the topics people ask about most. If you still need help, TACs provide tax help when a tax issue can’t be handled online or by phone. All TACs now provide service by appointment, so you’ll know in advance that you can get the service you need without long wait times. Before you visit, go to IRS.gov/TAC to find the nearest TAC and to check hours, available services, and appointment options. Or, on the IRS2Go app, under the Stay Connected tab, choose the Contact Us option and click on “Local Offices.” —————————————————————————– Below is a message to you from the Taxpayer Advocate Service, an independent organization established by Congress.

What Is the Taxpayer Advocate Service?

The Taxpayer Advocate Service (TAS) is an independent organization within the Internal Revenue Service (IRS). TAS helps taxpayers resolve problems with the IRS, makes administrative and legislative recommendations to prevent or correct the problems, and protects taxpayer rights. We work to ensure that every taxpayer is treated fairly and that you know and understand your rights under the Taxpayer Bill of Rights. We are Your Voice at the IRS.

How Can TAS Help Me?

TAS can help you resolve problems that you haven’t been able to resolve with the IRS on your own. Always try to resolve your problem with the IRS first, but if you can’t, then come to TAS. Our services are free .

• TAS helps all taxpayers (and their representatives), including individuals, businesses, and exempt organizations. You may be eligible for TAS help if your IRS problem is causing financial difficulty, if you’ve tried and been unable to resolve your issue with the IRS, or if you believe an IRS system, process, or procedure just isn’t working as it should.

• To get help any time with general tax topics, visit www.TaxpayerAdvocate.IRS.gov . The site can help

you with common tax issues and situations, such as what to do if you make a mistake on your return or if you get a notice from the IRS.

• TAS works to resolve large-scale (systemic) problems that affect many taxpayers. You can report systemic issues at www.IRS.gov/SAMS . (Be sure not to include any personal identifiable information.)

How Do I Contact TAS?

TAS has offices in every state, the District of Columbia, and Puerto Rico. To find your local advocate’s number:

• Go to www.TaxpayerAdvocate.IRS.gov/Contact-Us ,

• Check your local directory, or

• Call TAS toll free at 877-777-4778.

What Are My Rights as a Taxpayer?

The Taxpayer Bill of Rights describes ten basic rights that all taxpayers have when dealing with the IRS. Go to www.TaxpayerAdvocate.IRS.gov/Taxpayer-Rights for more information about the rights, what they mean to you, and how they apply to specific situations you may encounter with the IRS. TAS strives to protect taxpayer rights and ensure the IRS is administering the tax law in a fair and equitable way.

Publication 527 (2025) 35

To help us develop a more useful index, please let us know if you have ideas for index entries. Index See “Comments and Suggestions” in the “Introduction” for the ways you can reach us.

Points ( See Points) Settlement fees and other costs 10 Tax return preparation fees 5 First-year expensing 8 Form 1040 or 1040-SR :

A

Mortgages, payments to obtain 5 Cars :

Not rented for profit income 24 Part of property rented 23 Rental income and expenses 17 Schedule E 18 Form 1098 :

Accelerated Cost Recovery System

(ACRS) 12 ( See also Mod ified Accelerated Cost Recovery

MACRS recovery periods 13 Cash method taxpayers 3 Casualty losses 21 Charitable contributions :

System (MACRS)) Effective date 10 Accounting methods :

Accrual method 3 Cash method 3 Constructive receipt of income 3 Accrual method taxpayers 3 ACRS (Accelerated Cost Recovery System) :

Use of property 26 Cleaning and maintenance 4 Closing costs 10 Commissions 4 Computers :

MACRS recovery periods 13 Condominiums 21, 25 Constructive receipt of income 3 Cooperative housing 8, 22, 25 Cost basis 10 Credit reports 11 Credits :

Casualties and thefts 21 Form 4797 :

Mortgage interest 5 Form 4684 :

G

Effective date 10 Active participation 20 Activities not for profit 24 Additions to property 13

Passive activity losses 20

Sales of business property 21 Form 8582 :

( See also Improvement s)

Residential energy credits 12

Basis 11 MACRS recovery period 13 Adjusted basis :

MACRS depreciation 11 Adjusted gross income (AGI) :

D

Gains and losses :

Modified ( See Modified adjusted gross

Days of personal use 26 Days used for repairs and maintenance 27 Deductions :

income (MAGI)) Advance rent 3

At-risk rules 19 Casualty and theft losses 21 Limits on rental losses 18 Passive activity losses 19 Rental real estate activities 20 Sale of rental property 2, 21 General depreciation system (GDS)

Security deposits 4 Advertising 4 Allocation of expenses :

Change of property to rental use 22 How to divide expenses 25 Part of property rented 23, 24 Personal use of rental property 4, 25 Alternative Depreciation System (ADS) :

Capitalizing costs vs. effect on basis 12 Depreciation ( See Depreciation) Limitations on 18 Passive activity losses ( See Passive activity) Depreciation 8

( See Modified Accelerated Cost Recovery System (MACRS)) Basis ( See Basis) Change of property to rental use 22, 23 Claiming correct amount of 17 Declining balance method 10 Duration of property expected to last more

( See Modified Accelerated Cost Recovery System (MACRS))

Alternative Depreciation System (ADS)

H

Home :

Main home 26 Use as rental property ( See Use of home)

I

Improvements 8

Election of 13 MACRS 12, 17 Alternative minimum tax (AMT) :

Accelerated depreciation methods 8 Apartments :

Assessments for local improvements 11 Basis 11 Depreciation of rented property 8 MACRS recovery period 13 Insurance 4

Casualty or theft loss payments 12 Change of property to rental use 22 Fire insurance premiums, cost basis 11 Part of property rented 23 Premiums paid in advance 5 Title insurance, cost basis 10 Interest payments 5

Basement apartments 27 Dwelling units 25 Appraisal fees 11 Assessments for maintenance 12 Assessments, local ( See Local assessments) Assistance ( See Tax help) Assumption of mortgage 11 Attorneys’ fees 10, 11 Automobiles :

Recovery System (MACRS)) Methods 10, 15 Ownership of property 8 Rental expense 5 Rented property 8 Section 179 deduction 8 Special depreciation allowances 12 Straight line method 10 Useful life 8 Vacant rental property 6 Discount, bonds and notes issued at

than one year 8 Eligible property 8 First-year expensing 8 MACRS ( See Modified Accelerated Cost

( See also Repai rs )

MACRS recovery periods 13

B

Basis :

( See also Mortgage s)

Loan origination fees 6 Rental expenses 4

Adjusted basis 11 Assessments for local improvements 11 Basis other than cost 11 Cost basis 10 Decreases to 12 Deductions:

( See Original issue discount (OID)) Dividing of expenses ( See Allocation of

Definition 25 Fair rental price 26 Personal use of 25, 26

expenses) Dwelling units :

L

Land :

Capitalization of costs vs. 12 Not greater than basis 9 Fair market value 23 Increases to 11 MACRS depreciable basis 10 Property changed to rental use 23

E

Easements 12 Equipment rental expense 5

F

Fair market value (FMV) 23 Fair rental price 26 Fees :

Loan origination fees 6, 11

Passive activity losses and credits 19 Rental losses 18 Loans :

Cost basis 11 Depreciation 9 Leases :

refinancing, cost basis 11 Low or no interest 10

Cancellation payments 3 Equipment leasing 5 Limits :

C

Capital expenditures :

Deductions vs. effect on basis 12 Local benefit taxes 5

Assumption fees 11 Charges connected with getting or

36 Publication 527 (2025)

Origination fees 6 Local assessments 11 Losses ( See Gains and losses)

M

Real estate taxes 10 Real property trades or businesses 19 Recordkeeping requirements :

Missing children, photographs of 2 Modified Accelerated Cost Recovery System

Travel and transportation expenses 5 Recovery periods 13 Rent 11

Advance rent 3 Fair price 26 Rental expenses 4

(MACRS) 12-17 Additions or improvements to property 13 Adjusted basis 11 Alternative Depreciation System (ADS) 12,

Tables and figures :

Section 179 deductions 8 Security deposits 4 Settlement fees 10 Shared equity financing agreements 26 Special depreciation allowances 12 Spouse :

Material participation 20 Standard mileage rates 5 Surveys 10

T

Local transportation expenses 4, 5 Recordkeeping 5 Rental expenses 4 Standard mileage rate 5

17 Basis other than cost 11 Conventions 13 Cost basis 10 Depreciable basis 10 Effective date 10 Excluded property 12 General Depreciation System (GDS) 12, 13,

uses 25 Change of property to rental use 22 Cleaning and maintenance 4 Commissions 4 Depreciation 5 Dwelling unit used as home 26 Equipment rental 5 Home, property also used as 4 Improvements 8 Insurance 4, 5 Interest payments 4, 5 Local transportation expenses 4, 5 Part of property rented 23 Points 4, 6 Pre-rental expenses 5 Rental payments 4 Repairs 4, 7 Sale of property 6 Tax return preparation fees 5 Taxes 4 Tenant, paid by 3 Travel expenses 4 Utilities 4 Vacant rental property 6 Rental income :

Advertising 4 Allocation between rental and personal

rental activities (Table 2-1) 14 Tax credits :

Residential energy credits, effect on

Improvements, examples of (Table 1-1) 8 MACRS optional tables (Table 2-2d) 17 MACRS optional tables (Tables 2-2a, 2-2b,

and 2-2c) 16 MACRS recovery periods for property used in

15 Nonresidential rental property 13 Property used in rental activities

(Table 2-1) 14 Recovery periods 14, 15 Residential rental property 13, 15 Special depreciation allowances 12 Mortgages 5, 11

basis 12 Tax help 32 Tax return preparation fees 5 Taxes :

Assumption of, cost basis 11 Change of property to rental use 22 End of, OID 7 Interest 5, 22, 23 Part of property rented 23

Deduction of 4 Local benefit taxes 5 Real estate taxes 10 Transfer taxes 10 Theft losses 21 Title insurance 10 Transfer taxes 10 Travel and transportation expenses :

N

Nonresidential real property 13 Not-for-profit activities 24

O

Original issue discount (OID) 6, 7

P

U

Uncollected rent :

Income 5 Use of home :

Part interest :

Expenses 4 Income 4 Passive activity :

Maximum special allowance 20 Personal property :

Rental income from 4 Personal use of rental property 22, 25

Advance rent 3 Cancellation of lease payments 3 Dwelling unit used as home 26 Lease with option to buy 4 Not rented for profit 24 Part interest 4 Property received from tenant 4 Reporting 3, 17 Security deposit 4 Services received from tenant 4 Uncollected rent 5 Used as home 4 Rental losses 20

Before or after renting 27 Change to rental use 22 Days of personal use 26 Fair rental price 26 Passive activity rules exception 20 Personal use as dwelling unit 25 Utilities 4, 11

( See also Property changed to ren tal use ) Placed-in-service date 9 Points 4, 6, 11 Pre-rental expenses 5 Principal residence ( See Home) Profit, property not rented for 24 Property changed to rental use 22

( See also Gain s an d losses) ( See also Passive activity) Repairs 4, 7

S

Sale of property :

Expenses 6 Gain or loss 2, 21 Main home 2

V

( See als o Imp rovements)

Assessments for maintenance 12 Personal use of rental property exception for

Vacant rental property 6 Vacation homes :

Dwelling unit 25 Fair rental price 26 Personal use of 25 Valuation :

days used for repairs and maintenance 27

Fair market value 23

Basis 23 Publications ( See Tax help)

R

Real estate professionals 19

Publication 527 (2025) 37