Introduction to Rental Properties

Course Description:

This course discusses the reporting of rental income and expenses on Form 1040 Schedule E, and the rules that apply in various rental property scenarios. The course will also include the tax issues that arise when a client uses a rental property for personal use and how personal use affects the ability to deduct expenses and depreciation. Passive activity losses will be reviewed, so that students will understand what a passive activity loss is and how to apply the passive activity loss rules. The course will also touch briefly on other types of income reported on Schedule E such as oil and gas royalties and income from partnerships and S corporations reported on Schedule K-1.

Topics in the course are supported by numerous illustrative examples and include:

  • rental income and expenses
  • new rules on repairs versus improvements (effective January 1, 2014)
  • depreciation
  • passive activity losses
  • renting a vacation home
  • personal property changed to rental use
  • Net Investment Income Tax (NIIT) and how it affects rental activities
  • sale of a principal residence with prior rental use
  • rental real estate owned jointly by a husband and wife
  • oil and gas royalties
  • K-1s

Learning Objectives

Upon successful completion of this course, students will be able to:

  • identify transactions that are considered rental real estate income to the property owner
  • identify transactions that are considered deductible rental real estate expenses, differentiating between repairs and improvements
  • given a list of receipts and expenses related to a rental property, determine the owner’s basis in the property;
  • identify the criteria that determine whether a taxpayer’s rental activity income and losses are classified as passive or nonpassive
  • identify the methods used to calculate rental income and expenses for properties that are used for part personal, part business use during a tax year
Tax Year: 2018
Prerequisites:  None
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