Introduction

Do you own a second house that you rent out all the time? Do you own a vacation home that you rent out when you or your family isn’t using it?

These are two common types of residential rental activities discussed in this publication. In most cases, all rental income must be reported on your tax return, but there are differences in the expenses you are allowed to deduct and in the way the rental activity is reported on your return.

Chapter 1 discusses rental-for-profit activity in which there is no personal use of the property. It examines some common types of rental income and when each is reported, as well as some common types of expenses and which are deductible.

Chapter 2 discusses depreciation as it applies to your rental real estate activity—what property can be depreciated and how much it can be depreciated.

Chapter 3 covers the reporting of your rental income and deductions, including casualties and thefts, limitations on losses, and claiming the correct amount of depreciation.

Chapter 4 discusses special rental situations. These in- clude condominiums, cooperatives, property changed to rental use, renting only part of your property, and a not-for-profit rental activity.

Chapter 5 discusses the rules for rental income and ex- penses when there is also personal use of the dwelling unit, such as a vacation home.

Finally, chapter 6 explains how to get tax help from the IRS.

Sale or exchange of rental property. For information on how to figure and report any gain or loss from the sale, exchange, or other disposition of your rental property, see Pub. 544.

Sale of main home used as rental property. For information on how to figure and report any gain or loss from the sale or other disposition of your main home that you also used as rental property, see Pub. 523.

Tax-free exchange of rental property occasionally used for personal purposes. If you meet certain qualifying use standards, you may qualify for a tax-free exchange (a like-kind or section 1031 exchange) of one piece of rental property you own for a similar piece of rental property, even if you have used the rental property for personal purposes.

For information on the qualifying use standards, see Revenue Procedure 2008-16, 2008-10 I.R.B. 547, available at IRS.gov/irb/2008-10_IRB#RP-2008-16 . For more information on like-kind exchanges, see chapter 1 of Pub. 544.

Comments and suggestions. We welcome your comments about this publication and suggestions for future editions.

You can send us comments through IRS.gov/ FormComments . Or, you can write to the Internal Revenue Service, Tax Forms and Publications, 1111 Constitution Ave. NW, IR-6526, Washington, DC 20224.

Although we can’t respond individually to each comment received, we do appreciate your feedback and will consider your comments and suggestions as we revise our tax forms, instructions, and publications. Don’t send tax questions, tax returns, or payments to the above address.

Getting answers to your tax questions. If you have a tax question not answered by this publication or the How To Get Tax Help section at the end of this publication, go to the IRS Interactive Tax Assistant page at IRS.gov/ Help/ITA where you can find topics by using the search feature or viewing the categories listed.

Getting tax forms, instructions, and publications. Go to IRS.gov/Forms to download current and prior-year forms, instructions, and publications.

Ordering tax forms, instructions, and publications. Go to IRS.gov/OrderForms to order current forms, instructions, and publications; call 800-829-3676 to order prior-year forms and instructions. The IRS will process your order for forms and publications as soon as possible. Don’t resubmit requests you’ve already sent us. You can get forms and publications faster online.

2 Publication 527 (2025)

Useful Items You may want to see:

Publication

463

523

534

544

547

551

925

946

463 Travel, Gift, and Car Expenses

523 Selling Your Home

534 Depreciating Property Placed in Service Before 1987

544 Sales and Other Dispositions of Assets

547 Casualties, Disasters, and Thefts

551 Basis of Assets

925 Passive Activity and At-Risk Rules

946 How To Depreciate Property

Form (and Instructions)

461

4562

5213

7205

8582

8960

461 Excess Business Loss Limitation

4562 Depreciation and Amortization

5213 Election To Postpone Determination as To Whether the Presumption Applies That an Activity Is Engaged in for Profit

7205 Energy Efficient Commercial Buildings Deduction

8582 Passive Activity Loss Limitations

8960 Net Investment Income Tax—Individuals, Estates, and Trusts

Schedule E (Form 1040) S chedule E (Form 1040) upplemental Income

and Loss