Are You a Rental Income Pro?

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Questions and Answers

What form should rental income be reported on?

  • Schedule A, Itemized Deductions, of Form 1040
  • Schedule E, Supplemental Income and Loss, of Form 1040 (correct)
  • Schedule C, Profit or Loss from Business, of Form 1040
  • Form 1099-MISC

What information is needed to report rental income?

  • Name and address of the property, amount of expenses incurred, and amount of depreciation taken
  • Name and address of the property, amount of rent received, and amount of expenses incurred
  • Name and address of the property, amount of rent received, and amount of depreciation taken
  • Name and address of the property, amount of rent received, amount of expenses incurred, and amount of depreciation taken (correct)

What is the recovery period for residential rental property?

  • 10 years
  • 39 years
  • 15 years
  • 27.5 years (correct)

What is the recovery period for commercial real property?

<p>39 years (A)</p>
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What type of income is rental income considered?

<p>Ordinary income (D)</p>
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What deductions can be made from rental income?

<p>Advertising, cleaning and maintenance, utilities, taxes, interest, and commissions for the collection of rent, travel, and transportation (C)</p>
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Can the cost of fire and liability insurance be deducted from rental income?

<p>Yes, if the premium was paid in the year and is for more than 12 months in advance (A)</p>
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Can land be depreciated?

<p>No, land cannot be depreciated (B)</p>
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Can the cost of repairs be deducted from rental income?

<p>Yes, the cost of repairs can be deducted (B)</p>
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Can the cost of improvements be deducted from rental income in the current year?

<p>No, the cost of improvements is normally not deducted immediately (B)</p>
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Can a loss from a rental property be deducted from other income?

<p>Yes, a loss from a rental property may be able to be deducted from other income (D)</p>
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Is a deposit considered rental income?

<p>No, a deposit is not considered rental income (B)</p>
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