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Deduct Your Real Estate Expenses Faster by Filing IRS Form 8825

IRS Form 8825: Rental Real Estate Income and Expenses of a Partnership or an S Corporation

Form 8825, formally known as the Rental Real Estate Income and Expenses of a Partnership or an S Corporation, is used to report income, losses or deductions from real estate activities. This IRS form allows you to keep track of all rental transactions and separate property earnings or expenses from other business revenues. The process of filing your 8825 is similar to filing IRS Form 1120S, 1065 or 1065-B which have to be attached. In this blog post, you’ll learn how to file your real estate income faster and eliminate mistakes while completing form 8825.

Who Must File IRS Form 8825?

IRS Form 8825 is designed by the Internal Revenue Service for S corporations and partnerships. Before you begin completing this form, it is recommended to read the instructions for Form 1120S, 1065 or 1065-B. Pay attention to the Passive Activity Limitations, Passive Loss Limitation Activities and Extraterritorial Income Exclusion sections in the instructions.

When is IRS Form 8825 Required?

Form 8825 is used by partnerships or S corporations to report earnings or deductible expenses from buying or selling property. The transactions may include net loss or income from commercial operations that flow through from trusts or estates. The form allows for the reporting of up to eight properties. If you need to report transactions for more than eight properties, you may file additional forms.

What Shouldn’t Be Reported on IRS Form 8825?

The form can’t be used to report deductions or income from a business or trade activity other than real estate (other forms are used for reporting these items). You also may not submit this form to report expense deductions under Section 179 or any commercial revitalization deductions.

How to Complete IRS Form 8825?

Generally, IRS Form 8825 has three pages, one of which is dedicated to instructions. So, your task is to fill out the first two pages of the form and read the third one to be sure you do that right.

Begin by providing the following information: name, employer identification number, type and address of the property. The type of property is identified by a code ranging from 1 to 8.

From the list below determine which code relates to your property and enter it in the required field:

  • Single Family Residence – 1
  • Multi-Family Residence – 2
  • Vacation or Short-Term Rental – 3
  • Commercial – 4
  • Land – 5
  • Royalties – 6
  • Self-Rental – 7
  • Other – 8

Once you’ve entered those details, indicate all real estate income and expenses: gross rents, advertising, travel and auto, insurance, commissions, fees, penalties, wages and salaries, taxes, repairs and other amounts. Calculate the total income and expenses for each property.

Where to File IRS Form 8825?

Fill out your 8825 and attach Forms 1120S, 1065 or 1065-B and send all these documents to the IRS by March 15th, 2018.

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