PART II. Allowable Rental Expenses
Publication 527 — Residential Rental Property (Including Rental of Vacation Homes) · 2026-10-03 edition · updated 2026-10-04 · United States
1. Enter rents received . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.
2a. Enter the rental portion of deductible home mortgage interest. See instructions . . . . . . . . . . . 2a.
b. Enter the rental portion of deductible real estate taxes. See instructions . . . . . . . . . . . . . . . . . b.
c. Enter the rental portion of deductible casualty and theft losses. See instructions . . . . . . . . . . c.
d. Enter direct rental expenses. See instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . d.
e. Fully deductible rental expenses. Add lines 2a–2d. Enter here and on the appropriate lines on Schedule E. See instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2e.
3. Subtract line 2e from line 1. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.
4a. Enter the rental portion of expenses directly related to operating or maintaining the dwelling unit (such as repairs, insurance, and utilities) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4a.
b. Enter the rental portion of excess mortgage interest. See instructions . . . . . . . . . . . . . . . . . . b.
c. Enter the rental portion of excess real estate taxes. See instructions . . . . . . . . . . . . . . . . . . . c.
d. Carryover of operating expenses from 2024 worksheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . d.
e. Add lines 4a–4d . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . e.
f. Allowable expenses. Enter the smaller of line 3 or line 4e. See instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4f.
5. Subtract line 4f from line 3. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.
6a. Enter the rental portion of excess casualty and theft losses. See instructions . . . . . . . . . . . . . 6a.
b. Enter the rental portion of depreciation of the dwelling unit . . . . . . . . . . . . . . . . . . . . . . . . . . . b.
c. Carryover of excess casualty and theft losses and depreciation from 2024 worksheet . . . . . . c.
d. Add lines 6a–6c . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . d.
e. Allowable excess casualty and theft losses and depreciation. Enter the smaller of line 5 or line 6d. See instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6e.
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