Schedule E expense lines 5–19 explained: what goes on which line
Short answer: On the 2025 form, Schedule E Part I has 15 expense lines, 5 through 19, with one column per property. Day-to-day costs go on their named line (advertising, insurance, mortgage interest, repairs, utilities and so on). Costs that better, restore or adapt the property are improvements. Those don't go on line 14. You capitalize them and recover them through depreciation on line 18, unless a safe harbor applies.
The Schedule E instructions say you can deduct all ordinary and necessary rental expenses, but "do not deduct the value of your own labor or amounts paid for capital investments or capital improvements."
Which year's form? 2025 final vs 2026 draft
As of November 10, 2026, the most recent final versions on IRS.gov are the 2025 Schedule E (Form 1040) and the 2025 Instructions for Schedule E. The line names below come from that form. The IRS has also posted an early-release 2026 draft Schedule E and draft 2026 instructions, both marked "DRAFT—NOT FOR FILING". In the draft, lines 5–12 and 14–20 keep the same names and numbers, but line 13 is split into 13a Vehicle loan and 13b Other. Drafts can change, so check the final 2026 form before you file your 2026 return.
The expense lines at a glance
| Line | Name on the 2025 form | What the IRS says belongs there (short version) |
|---|---|---|
| 5 | Advertising | Advertising for the rental. Pub. 527 lists it among the most common rental expenses. |
| 6 | Auto and travel | Car and travel costs for your rental activity: either actual expenses or the standard mileage rate, plus parking and tolls. Also 50% of meals while traveling away from home. Commuting from home is generally not deductible (see below). |
| 7 | Cleaning and maintenance | Cleaning and upkeep. The instructions don't define line 7 separately from repairs, so agree on a consistent rule with your preparer. |
| 8 | Commissions | Agents' commissions (named in the instructions as an ordinary and necessary expense). |
| 9 | Insurance | Premiums for the year. If you prepay more than 1 year, deduct only the part for each year (Pub. 527). |
| 10 | Legal and other professional fees | Rental-related legal and professional fees, including tax advice and tax-prep fees for the rental. Legal fees to defend or protect title, recover property, or develop or improve property are capitalized, not deducted. |
| 11 | Management fees | Property management fees. |
| 12 | Mortgage interest paid to banks, etc. | Mortgage interest paid to banks or other financial institutions (usually shown on Form 1098). Interest only, not principal. |
| 13 | Other interest | Mortgage interest not paid to a financial institution, or with no Form 1098; your share if a co-borrower got the 1098. 2026 draft: 13a vehicle loan interest (business-use share), 13b everything else. |
| 14 | Repairs | Costs that keep the property in an ordinarily efficient operating condition, for example "fixing a broken lock or painting a room". Not improvements. |
| 15 | Supplies | Materials and supplies used for the rental (see the IRS definition below). |
| 16 | Taxes | Real estate taxes on the rental. Local "benefit" assessments for new streets, sidewalks or sewers are added to basis instead (Pub. 527). |
| 17 | Utilities | Utilities you pay for the rental. Rental-related phone calls count, but the base rate for the first phone line into your own home is personal. |
| 18 | Depreciation expense or depletion | Depreciation of the building (not land) and of capitalized improvements. Form 4562 is required in some years. |
| 19 | Other (list) | Ordinary and necessary expenses not listed on lines 5–18. Pub. 527 puts de minimis safe-harbor amounts here. Car lease payments go here if you use actual auto expenses. |
| 20 | Total expenses | Add lines 5 through 19. |
Sources: line names from the 2025 Schedule E; line notes from the 2025 Instructions for Schedule E (General Instructions for Lines 5 Through 21; lines 6, 10, 12–14, 17–19) and Pub. 527 (2025), chapter 1, Rental Expenses.
Line-by-line notes landlords get wrong
Line 6: auto and travel
- Two methods: actual expenses or the standard mileage rate. The rate was 70 cents a mile for 2025. For 2026 the IRS rate is 72.5 cents (Jan 1–Jun 30) and 76 cents (Jul 1–Dec 31) (IRS standard mileage rates; the same figures are in the 2026 draft instructions). Add parking fees and tolls.
- If you use the standard mileage rate, you can't also deduct lease payments, depreciation or actual car expenses. If you use actual expenses, lease payments go on line 19 and depreciation on line 18.
- Any auto expense means completing Form 4562, Part V, and attaching it (instructions, line 6).
- Commuting: Pub. 527 says travel between your home and a rental property generally counts as nondeductible commuting unless your home is your principal place of business.
Lines 12 and 13: interest
- Interest follows the loan proceeds. If you refinance for more than the old balance and use the extra cash for something personal, the interest on that part generally isn't a rental expense (Pub. 527). Keeping loan proceeds in a separate account makes tracing easier (instructions).
- Points charged only for the use of money are deducted over the life of the loan, not all in the year you pay them. Mortgage commissions, abstract fees and recording fees are added to basis, not deducted as interest.
- 2026 draft: line 13a is for the business-use portion of vehicle loan interest. Line 13b covers other rental interest, including credit-card interest on purchases for repairs or maintenance (but not improvements) (draft 2026 instructions).
Line 16: taxes
Per Pub. 527, if you bought the property and agreed to pay back real estate taxes the seller owed (and weren't reimbursed), those taxes are part of your basis, not a deduction.
Line 15 vs line 19: supplies and small purchases
The IRS's tangible property regulations FAQ treats an item as "materials and supplies" if, for example, it costs $200 or less, is expected to last 12 months or less, is a consumable, or is a component bought to maintain or repair property. Items you deduct under the de minimis safe harbor (below) go on line 19 according to Pub. 527.
Repairs (line 14) vs improvements (line 18): the IRS test
An expense is an improvement, and is capitalized, if it results in a betterment, a restoration or an adaptation (Pub. 527; TPR FAQ):
- Betterment: fixing a defect that existed before you bought the property, enlarging or expanding it, or increasing its capacity, strength or quality.
- Restoration: replacing a substantial structural part, repairing damage after you adjusted basis for a casualty loss, or rebuilding to like-new condition.
- Adaptation: converting the property to a use that isn't consistent with how you were using it when you started renting it.
For a building, the IRS applies this test to the building structure and separately to each key building system: plumbing, electrical, HVAC, elevators, escalators, fire protection and alarm, gas distribution and security (TPR FAQ). The FAQ says "material" isn't defined and you should "use common sense and reasonable judgment".
| Usually a repair (line 14) | Usually an improvement (capitalize, line 18) |
|---|---|
| Fixing a broken lock; painting a room (IRS examples) | Adding substantial insulation; replacing an entire HVAC system (IRS examples) |
| Work that keeps the property in an ordinarily efficient operating condition | From Pub. 527 Table 1-1: new roof, furnace, central air conditioning, water heater, flooring, wall-to-wall carpeting, kitchen modernization, built-in appliances, deck, fence, driveway, wiring upgrades, security system |
Pub. 527 says capitalized improvements are generally depreciated as if each were separate property. An addition or improvement such as a new roof uses the same recovery period as the property it improves, which for residential rental buildings under GDS is 27.5 years. Land isn't depreciable.
Three safe harbors that can turn an "improvement" into a deduction
- De minimis safe harbor (annual election). Deduct amounts paid for tangible property up to $2,500 per invoice or item if you don't have an applicable financial statement (AFS). The limit is $5,000 with an AFS, which the FAQ describes as, for example, an SEC filing or a certified audited financial statement with a CPA report. You must also expense those items on your books under a consistent policy in place at the start of the year. To elect, attach a statement titled "Section 1.263(a)-1(f) de minimis safe harbor election", with your name, address and TIN, to your timely filed original return (including extensions). It then applies to all qualifying amounts that year. It doesn't cover land. Amounts go on line 19 (TPR FAQ; Pub. 527).
- Routine maintenance safe harbor. Recurring work that keeps the property in an ordinarily efficient operating condition and that, for a building structure or building system, you reasonably expect to do more than once in the 10 years after it was placed in service. It doesn't apply to betterments.
- Safe harbor for small taxpayers (annual election). If your average annual gross receipts are $10 million or less and the building's unadjusted basis is $1 million or less, you can deduct repairs, maintenance and improvements on that building if the year's total doesn't exceed the lesser of 2% of the unadjusted basis or $10,000. You elect by attaching a statement to the return.
Source: IRS Tangible property final regulations FAQ (last reviewed Aug 4, 2026). The elections are made on the return. Talk to your preparer before you rely on one.
Common Schedule E mistakes (straight from IRS rules)
- Deducting the whole mortgage payment. Only the interest goes on line 12/13. Principal isn't deductible, and the building is recovered through depreciation (Pub. 527).
- Deducting your own labor. Not allowed (instructions).
- Putting an improvement on line 14. Capitalize it unless a safe harbor applies. "Separate the costs of repairs and improvements, and keep accurate records" (Pub. 527).
- Forgetting tenant-paid expenses. If a tenant pays one of your bills (for example, a repair) and takes it off the rent, the payment is rental income, and you can then deduct the expense. Services a tenant provides instead of rent are income at fair market value (Pub. 527).
- Treating a security deposit as income (or forgetting the part you kept). A deposit you plan to return isn't income. The amount you keep is income in the year you keep it. A "deposit" applied as the last month's rent is advance rent, which is income when received.
- Deducting a multi-year insurance premium all at once, or points all in one year.
- Deducting lost rent. Cash-basis landlords can't deduct uncollected rent, and you can't deduct rent lost while a unit was vacant. You can still deduct ordinary expenses while it's held for rent.
- Ignoring personal-use days. Expenses for days you or family used the unit aren't rental expenses. The instructions' example: 7 personal days and 63 rented days means 10% of expenses aren't deductible on Schedule E.
- Depreciating the land. Split your purchase price between land and building, using fair market value or the property-tax assessment ratio (instructions, line 18).
- Skipping Line A/B. Line A asks whether you made payments that require a Form 1099. For 2026 payments the main threshold is $2,000 (draft 2026 instructions). See our landlord 1099 guide.
Record-keeping that makes Schedule E easy
- The instructions: "You must keep records to support items reported on Schedule E." Without them, you "may have to pay additional tax and be subject to penalties."
- Track every expense by property (Schedule E has a column per property) and by line.
- Keep improvements on a separate list with date, cost and what was replaced. You'll need those costs to depreciate the property and to figure gain when you sell (Pub. 527).
- Keep mileage and travel logs. Pub. 527 points to chapter 5 of Pub. 463 for the record rules.
- How long: generally 3 years after filing, 6 or 7 years in some cases, and property records until the period of limitations expires for the year you dispose of the property (IRS: How long should I keep records?).
Getting ready for year-end? The free Year-End Landlord Ops Checklist walks through year-end books and a CPA packing list.
Log expenses by Schedule E line all year, not in a shoebox in April.
Kitwright's Small Landlord Schedule E Ops Kit is a $19 Excel workbook (also opens in Google Sheets and LibreOffice). Its expense categories use the 2025 Schedule E line names for lines 5–19. It also has a rent roll, an income log, a maintenance log, a lease-renewal tracker, and a tax-year summary with portfolio totals plus per-property totals for your first two properties. It's a bookkeeping aid. It doesn't decide whether something is a repair or an improvement, doesn't calculate depreciation, and doesn't file anything. If the final 2026 form keeps the 13a/13b split, note vehicle-loan interest separately.
See the Schedule E Ops Kit on Gumroad ($19)
More about the kit: kit overview page.
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FAQ
Which Schedule E is this guide based on?
The final 2025 Schedule E (Form 1040) and its 2025 instructions, the most recent final versions on IRS.gov as of November 10, 2026. The IRS has also posted a 2026 draft. Its expense lines are the same except that line 13 is split into 13a (vehicle loan) and 13b (other). Check the final 2026 form before you file.
Is a new water heater a repair (line 14) or an improvement (line 18)?
Publication 527 lists a water heater among its examples of improvements, which are generally capitalized and depreciated rather than deducted on line 14. A safe harbor may still let you deduct it. Under the de minimis safe harbor, if you elect it, items up to $2,500 per invoice or item (without an applicable financial statement) can be deducted, and Pub. 527 says those amounts go on line 19. Your preparer can tell you which treatment fits your facts.
Where does the de minimis safe harbor amount go on Schedule E?
Publication 527 says that if you elect the de minimis safe harbor for your rental activity, you may deduct those amounts as rental expenses on line 19 (Other). The election is an annual statement attached to your timely filed original return.
Can I deduct my mortgage payment on Schedule E?
Only the interest, not the principal. Mortgage interest paid to a bank or other financial institution goes on line 12. Publication 527 says you can't simply deduct your mortgage or principal payments; you recover the cost of the building through depreciation on line 18.
Can I deduct my own time spent fixing the rental?
No. The Schedule E instructions say not to deduct the value of your own labor. You can deduct the materials you bought, subject to the repair-vs-improvement rules.
Are tax-prep fees deductible on Schedule E?
Yes, the part for your rental. The instructions say to include on line 10 fees for tax advice and for preparing tax forms related to your rental real estate. Pub. 527's example: on your 2025 Schedule E you deduct fees paid in 2025 to prepare Part I of your 2024 Schedule E.
How long should I keep rental receipts?
The IRS says to generally keep records that support a return for 3 years, longer in some cases (6 or 7 years). Keep records relating to the property itself, such as purchase and improvement costs, until the period of limitations expires for the year you sell or otherwise dispose of the property.
Is this tax advice?
No. This is general educational information summarized from IRS.gov pages as of November 10, 2026. Your facts matter. Confirm with the IRS instructions or a tax professional before you file.
Sources (all IRS.gov)
- IRS, 2025 Instructions for Schedule E (Form 1040): lines 5–21 general instructions, lines 2, 6, 10, 12–14, 17–19, Line A, Recordkeeping
- IRS, 2025 Schedule E (Form 1040) (PDF): official line names and numbers
- IRS, 2026 Schedule E draft and 2026 Instructions for Schedule E draft (PDFs, "DRAFT—NOT FOR FILING"): new lines 13a/13b, 2026 Line A threshold, 2026 mileage
- IRS, Publication 527 (2025), Residential Rental Property: rental income and expenses, repairs vs improvements, Table 1-1, de minimis on line 19, recovery periods
- IRS, Publication 946 (2025), How To Depreciate Property: depreciation background, unadjusted basis
- IRS, Tangible property final regulations (FAQ): unit of property, betterment/restoration/adaptation, de minimis, routine maintenance and small-taxpayer safe harbors, materials and supplies
- IRS, Standard mileage rates
- IRS, How long should I keep records?
Also from Kitwright: landlord 1099 contractor guide, free security deposit deduction calculator and state deposit guides (linked from the calculator).