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

Form 8825 is used by partnerships and S corporations to report income and deductible expenses from rental real estate activities, as well as to compute a potential business interest expense limitation. Learn more about effectively completing Form 8825 with this article.

What is Form 8825?

Form 8825 is an Internal Revenue Service form used by partnerships and S corporations to report income and deductible expenses from rental real estate activities, including net income (loss) from rental real estate activities that flow through from partnerships, estates, or trusts. Before completing the form, it is important to read the passive activity limitations in the instructions for Form 1065 or 1120S, particularly regarding the definition of “rental activity,” as well as the extraterritorial income exclusion in the instructions for Form 1065 or 1120S. The form is used to report income from up to eight properties. It is also important to note new legislation enactments, such as the Tax Reform Act of 2017 and the Bipartisan Budget Act of 2015, which may affect the form’s instructions and calculation of interest expense. Additionally, Form 8825 does not include portfolio income or deductions, the section 179 expense deduction, or commercial revitalization deductions.

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IRS Form 8825 – Who Needs to Fill It Out?

IRS Form 8825 is used by partnerships and S corporations to report income and deductible expenses from rental real estate activities, including those that flow through from partnerships, estates, and trusts. It must be completed for tax years beginning in 2018 or later, and prior revisions must be used for earlier tax years. Form 8825 should be filled out by anyone who owns multiple rental properties, or whose rental activity falls under the Passive Activity Limitations of either Form 1065 or Form 1120S. It provides space for up to eight properties, with lines 1-17 to be completed for each, and lines 18a-21 to be completed once with the totals from all properties combined. Interest expense may be limited, and depreciation deductions may be claimed for rental property but not for land.

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Step-by-Step: Form 8825 Instructions For Filling Out the Document

Before completing Form 8825, make sure to read the instructions for Form 1065 or Form 1120S for the definition of a “rental activity,” details on the passive activity limitation, and the Extraterritorial Income Exclusion. Form 8825 gives space to report income and deductible expenses for up to eight properties; if more, attach additional forms. For each property, include the street address, city or town, zip code, and type of property on line 1. Enter the number of days rented and days with personal use. On line 9, your interest expense may be limited; if so, consult Form 8990 for more info. Depreciation is reported on line 14; use Form 4562 and its instructions to calculate the deduction. Do not report portfolio income, section 179 expenses, or items to be reported separately to partners or shareholders on Form 8825.

Below, we present a table that will help you understand how to fill out Form 8825.

Information Required for Form 8825 Details
Property Information Include property details on line 1
Rental Days Enter the number of days rented and days with personal use
Interest Expense Check Form 8990 for interest expense limitations
Depreciation Report depreciation on line 14 using Form 4562
Exclusions Do not report portfolio income or other specific items
See also:  Form 8886-T: Disclosure by Tax Exempt Entity Regarding Prohibited Tax Shelter Transaction

Do You Need to File Form 8825 Each Year?

Yes, partnerships and S corporations need to file Form 8825 each year to report income and expenses from rental real estate activities. It should be completed for each tax year beginning in 2018 or later, until a later revision is issued. There are specific instructions to be aware of before filing, such as combining buildings for the purpose of passive activity limitations and attaching a statement to Schedule K-1 that reports each partner or shareholder’s share of net income by separate activity. Additionally, Form 8825 cannot be used to report income or deductions from a trade or business activity, portfolio income or deductions, or any of the other items listed.

Download the official IRS Form 8825 PDF

On the official IRS website, you will find a link to download Form 8825. However, to make it easier for you, we are providing the link in our article, which comes directly from the official irs.gov website! Click to download: Form 8825

Sources:

https://www.irs.gov/forms-pubs/about-form-8825

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