9.1 Reporting Rental Real Estate Income and Expenses

On the cash basis, you report rent income on your tax return for the year in which you receive payment or in which you “constructively” receive it, such as where payment is credited to your bank account.

On the accrual basis, you report income on your tax return for the year in which you are entitled to receive payment, even if it is not actually paid. However, you do not report accrued income if the financial condition of the tenant makes collection doubtful. If you sue for payment, you do not report income until you win a collectible judgment.

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image Caution
IRS to Increase Audits of Taxpayers With Rental Real Estate Losses
Following the recommendation of the Treasury Inspector General for Tax Administration (TIGTA), the IRS is setting up a plan to identify tax returns with questionable rental real estate losses and to increase the number of examinations of such returns. TIGTA and the IRS believe that the audits can bring in millions of dollars in additional revenue from taxpayers who have underpaid tax on their rental income.
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Schedule E reporting.

Use Schedule E to report rental real estate income and expenses unless you are providing substantial services for tenants that go beyond the provision of utilities, trash collection, and cleaning of public areas. For example, if you operate ...

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