The short answer
In most cases, rent you receive from a house or apartment is taxable income that you must report. You can generally reduce it with the rental expenses the rules allow — such as mortgage interest, property taxes, insurance, repairs, and depreciation of the building. Individual owners commonly report this on Schedule E.
This guide is about ordinary long-term rentals. For short-term rentals like Airbnb, see the Airbnb host tax guide and the 14-day rule. For property abroad, see Foreign rental property.
What counts as rental income
Rental income is broader than monthly rent. Depending on the facts, it can also include items such as advance rent, certain security deposits you keep or apply to rent, and expenses a tenant pays on your behalf. Publication 527 lists what counts.
Common deductible expenses
Subject to the applicable rules, common rental expense categories can include:
| Expense | Note |
|---|---|
| Mortgage interest | The interest — not the principal you pay down |
| Property taxes | For the rental property |
| Insurance | Policies covering the rental |
| Repairs and maintenance | Keeping the property in working condition; improvements are treated differently |
| Management fees | Fees paid to a property manager |
| Utilities you pay as owner | Not utilities the tenant pays |
| Depreciation | Recovering the cost of the building over time |
A repair keeps the property in good working condition and is generally deductible. An improvement — something that betters, restores, or adapts the property — is generally added to basis and depreciated instead. They are not automatically treated the same.
Depreciation: the expense people miss
- A residential rental building is generally depreciated over 27.5 years under the normal General Depreciation System (GDS) rules.
- Land is not depreciated. Only the building (and certain improvements) can be depreciated, so the cost has to be split between land and building.
- Depreciation generally begins when the property is placed in service — when it is ready and available for rent.
- Depreciation reduces your basis, which affects your gain when you eventually sell. See selling a rental property.
Publication 946 and Publication 527 explain how to figure it.
Where it is reported
Individual owners commonly report rental income and expenses on Schedule E (Form 1040). Some facts can change how a rental is reported, so check the Schedule E instructions if your situation is unusual.
Two rules that can change the answer
- Personal use. If you or your family also use the property, the rules for dividing expenses — and for how much you can deduct — can change.
- Passive activity limits. Rental activities are generally passive, and the passive activity rules can limit how much of a rental loss you can deduct currently.
Example
Kevin rents out a condo for $2,000 a month. In 2025 he receives $24,000 in rent. He pays mortgage interest, property taxes, insurance, and a repair to a leaking faucet, and he depreciates the building portion of his cost over 27.5 years, starting when it was ready and available for rent. He reports the rent and these expenses on Schedule E. When he later replaces the roof, he treats it as an improvement and depreciates it rather than deducting it all at once.