Questions & Answers

Rental Income (Schedule E)

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If you have rental income from a home you own, a vacation home, or any other type of property, enter your rental information on the Rental Income screen.

The IRS allows you to deduct any repairs that you make on the rental property. They do not allow you to deduct improvements, improvements must be depreciated.

A repair keeps your rental property in good condition and is a deductible expense in the year that you pay for it. Repairs can include painting, fixing a broken toilet, or replacing a faulty light switch.

Improvements, on the other hand, add value to your property and are not deductible when you pay for them. You must recover the cost of improvements by depreciating the expense as a separate depreciable asset over your property's life expectancy. Improvements can include a new roof, patio, or garage.

You will need to decide whether your changes were improvement or repairs. If they were repairs, then you would enter them on the Rental Expenses screen as repairs.

If they were improvements, you would enter each improvement as a separate depreciable asset in the Depreciable Assets section.

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