Form PA-40 Schedule E "Rents and Royalty Income (Loss)" - Pennsylvania

What Is Form PA-40 Schedule E?

This is a legal form that was released by the Pennsylvania Department of Revenue - a government authority operating within Pennsylvania.The document is a supplement to Form PA-40, Pennsylvania Income Tax Return. As of today, no separate filing guidelines for the form are provided by the issuing department.

Form Details:

  • Released on May 1, 2019;
  • The latest edition provided by the Pennsylvania Department of Revenue;
  • Easy to use and ready to print;
  • Quick to customize;
  • Compatible with most PDF-viewing applications;
  • Fill out the form in our online filing application.

Download a fillable version of Form PA-40 Schedule E by clicking the link below or browse more documents and templates provided by the Pennsylvania Department of Revenue.

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Download Form PA-40 Schedule E "Rents and Royalty Income (Loss)" - Pennsylvania

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1901410058
PA SCHEDULE E
Rents and Royalty Income (Loss)
2019
PA-40 E 05-19 (FI)
PA Department of Revenue
OFFICIAL USE ONLY
START
Name of the taxpayer filing this schedule
Social Security Number (shown first) or EIN
Sales Tax License Number (if applicable). See the instructions.
Are rental payments made by lessees through a third party broker?
Yes
No
See the instructions. Report the income and expenses for the use of your personal property by others. Also, report the income you received for the extraction of oil, gas and other minerals
from your property, and the use of your patents and copyrights. Note: If you are in the business of renting your property, extracting minerals from your property or producing products from
your patents and copyrights – use PA Schedule C.
SECTION I – Property Description Enter the type and complete address of each rental real estate property, and/or each source of royalty income. See the instructions.
Type
Description of Property
For Profit Property
Complete Address (street, city, state and ZIP code)
YES
A
NO
YES
B
NO
YES
C
NO
Property type:
1. Single family residence
3. Vacation/short-term rental
5. Land
7. Self-rental
2. Multi-family residence
4. Commercial
6. Royalties
8. Other, describe:
SECTION II – Income and Expenses
Property A
Property B
Property C
T
S
J
T
S
J
T
S
J
Line a: Identify the property from Section I and indicate ownership (T/S/J)
Line b: Is the property rental location in PA?
YES
NO
YES
NO
YES
NO
Line c: Is the property rented for any period less than 30 days?
YES
NO
YES
NO
YES
NO
Income:
1. Rent received . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.
2. Royalties received . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.
Expenses: 3. Advertising . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.
4. Automobile and travel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.
5. Cleaning and maintenance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.
6. Commissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.
7. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.
8. Legal and professional fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.
9. Management fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.
10. Mortgage interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.
11. Other interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.
12. Repairs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.
13. Supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.
14. Taxes - not based on net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.
15. Utilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.
16. Depreciation expense - See the instructions . . . . . . . . . . . . . . . . . . . . . . . . 16.
17. Other expenses (itemize): . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
18. Total Expenses - Add Lines 3 through 17 . . . . . . . . . . . . . . . . . . . . . . . . . . 18.
19. Income – Subtract Line 18 from Line 1 or 2. . . . . . . . . . . . . . . . . . . . . . . . . 19.
Income or
Loss:
20. Loss – Subtract Line 1 or 2 from Line 18. (fill in the oval, if a net loss) . . 20.
21. Net Income or Loss - Total Lines 19 and 20 for short-term rentals. See the instructions. . . . . . . . . .(fill in the oval, if a net loss)
21.
22. Net Income or Loss - Total Lines 19 and 20 for non short-term rentals. See the instructions. . . . . . .(fill in the oval, if a net loss)
22.
23. Rent or royalty income (loss) from PA S corporation(s) and partnerships from your
PA Schedule(s) RK-1 or NRK-1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(fill in the oval, if a net loss)
23.
24. Net Rent and Royalty Income (Loss). Add Lines 22 and 23. If submitting more than one schedule,
total all Line 22 and 23 amounts and include on Line 6 of your PA-40. . . . . . . . . . . . . . . . . . . . . . . . . . .(fill in the oval, if a net loss)
24.
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1901410058
PA SCHEDULE E
Rents and Royalty Income (Loss)
2019
PA-40 E 05-19 (FI)
PA Department of Revenue
OFFICIAL USE ONLY
START
Name of the taxpayer filing this schedule
Social Security Number (shown first) or EIN
Sales Tax License Number (if applicable). See the instructions.
Are rental payments made by lessees through a third party broker?
Yes
No
See the instructions. Report the income and expenses for the use of your personal property by others. Also, report the income you received for the extraction of oil, gas and other minerals
from your property, and the use of your patents and copyrights. Note: If you are in the business of renting your property, extracting minerals from your property or producing products from
your patents and copyrights – use PA Schedule C.
SECTION I – Property Description Enter the type and complete address of each rental real estate property, and/or each source of royalty income. See the instructions.
Type
Description of Property
For Profit Property
Complete Address (street, city, state and ZIP code)
YES
A
NO
YES
B
NO
YES
C
NO
Property type:
1. Single family residence
3. Vacation/short-term rental
5. Land
7. Self-rental
2. Multi-family residence
4. Commercial
6. Royalties
8. Other, describe:
SECTION II – Income and Expenses
Property A
Property B
Property C
T
S
J
T
S
J
T
S
J
Line a: Identify the property from Section I and indicate ownership (T/S/J)
Line b: Is the property rental location in PA?
YES
NO
YES
NO
YES
NO
Line c: Is the property rented for any period less than 30 days?
YES
NO
YES
NO
YES
NO
Income:
1. Rent received . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.
2. Royalties received . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.
Expenses: 3. Advertising . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.
4. Automobile and travel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.
5. Cleaning and maintenance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.
6. Commissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.
7. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.
8. Legal and professional fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.
9. Management fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.
10. Mortgage interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.
11. Other interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.
12. Repairs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.
13. Supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.
14. Taxes - not based on net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.
15. Utilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.
16. Depreciation expense - See the instructions . . . . . . . . . . . . . . . . . . . . . . . . 16.
17. Other expenses (itemize): . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
18. Total Expenses - Add Lines 3 through 17 . . . . . . . . . . . . . . . . . . . . . . . . . . 18.
19. Income – Subtract Line 18 from Line 1 or 2. . . . . . . . . . . . . . . . . . . . . . . . . 19.
Income or
Loss:
20. Loss – Subtract Line 1 or 2 from Line 18. (fill in the oval, if a net loss) . . 20.
21. Net Income or Loss - Total Lines 19 and 20 for short-term rentals. See the instructions. . . . . . . . . .(fill in the oval, if a net loss)
21.
22. Net Income or Loss - Total Lines 19 and 20 for non short-term rentals. See the instructions. . . . . . .(fill in the oval, if a net loss)
22.
23. Rent or royalty income (loss) from PA S corporation(s) and partnerships from your
PA Schedule(s) RK-1 or NRK-1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(fill in the oval, if a net loss)
23.
24. Net Rent and Royalty Income (Loss). Add Lines 22 and 23. If submitting more than one schedule,
total all Line 22 and 23 amounts and include on Line 6 of your PA-40. . . . . . . . . . . . . . . . . . . . . . . . . . .(fill in the oval, if a net loss)
24.
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PA-40 E IN 05-19
GENERAL INFORMATION
FORM INSTRUCTIONS
PURPOSE OF SCHEDULE
IDENTIFICATION INFORMATION
Use PA-40 Schedule E to report the amount of net income
NAME
(loss) from rents royalties, patents and copyrights for indi-
Enter the name of the taxpayer. If a jointly filed return, enter
vidual or fiduciary (estate or trust) taxpayers.
the name of the primary taxpayer (name shown first on the
Refer to the PA Personal Income Tax Guide – Net Income
PA-40, Personal Income Tax Return). Enter the primary tax-
(Loss) from Rents, Royalties, Copyrights and Patents sec-
payer’s name even if reporting the income for the spouse.
tion for additional information.
Enter the name of the estate or trust if including with a PA-
41, Fiduciary Income Tax Return.
RECORDING DOLLAR AMOUNTS
SOCIAL SECURITY NUMBER or EIN
Show money amounts in whole-dollars only. Eliminate any
Enter the Social Security number (SSN) of the taxpayer.
amount less than $0.50 and increase any amount that is
Enter the primary taxpayer’s SSN also when reporting net
$0.50 or more to the next highest dollar.
income (loss) from rents, royalties patents and copyrights
for the spouse. Enter the federal employer identification
WHO MUST COMPLETE
number (EIN) when reporting net income (loss) from rents,
royalties, patents and copyrights for an estate or trust.
PA-40 Schedule E must be completed and included with an
SALES TAX LICENSE NUMBER
originally filed PA-40, Personal Income Tax Return, or PA-
41, Fiduciary Income Tax Return, if a taxpayer, spouse or fi-
Property owners who rent their property for rental periods of
duciary (estate or trust) has net income (loss) from:
less than 30 days are required to obtain a sales tax license
● Rental property;
number in order to collect and remit the hotel occupancy tax.
If the taxpayer collects and remits hotel occupancy tax on
● Royalties from oil and gas wells, book sales and/or other
short-term rentals of less than 30 days, enter the Pennsyl-
sources;
vania Sales Tax License Number used to collect and remit
● Patents; and/or
the tax. If a home-sharing website or third party broker, such
● Copyrights.
as a local real estate management company, collects and
PA-40 Schedule E must be completed even if the only trans-
remits the hotel occupancy tax, complete the “Yes” oval as
action is to report a loss.
the answer to the Third Party Broker question and include
the third party broker’s sales tax license number.
CAUTION: Do not use federal Schedule E to report net
THIRD PARTY BROKERS
income (loss) from rents, royalties, patents and copy-
rights. Unless otherwise noted, Pennsylvania rules generally
If payment of the rent or lease payment is not made directly
do not follow the federal rules for determining the net income
to the owner of a property but is made by the lessee to a
(loss) realized from rents, royalties, patents and copyrights.
home sharing website or third party broker, such as a local
real estate management company, complete the “Yes” oval.
An amended PA Schedule E must be included with Schedule
PA-40 X or Schedule PA-41 X if increases or decreases in
GENERAL INSTRUCTIONS
income or expense amounts on PA Schedule E are discov-
ered after an original or other amended return is filed with
the department. Section III on Page 2 of Schedule PA-40 X
When entering rental and royalty expenses, a deduction
or Schedule PA-41 X must be completed to explain any in-
may be taken for all ordinary and necessary expenses for
crease or decrease to the amount of net income (loss) from
each property. Do not deduct amounts paid for capital in-
rents, royalties, patents and copyrights reported on an
vestments or capital improvements other than through de-
amended PA-40, Personal Income Tax Return, or amended
preciation and do not deduct the value of personal labor.
PA-41, Fiduciary Income Tax Return.
IMPORTANT: If renting part of a personal residence
IMPORTANT: For taxpayers in the real estate sales
or other property, deduct only those expenses (or per-
business, do not use PA Schedule E. Report any net
centages of expenses) that apply to the rented part.
income (loss) from rentals of real estate held for sale to cus-
OIL AND GAS ROYALTY INCOME AND EXPENSES
tomers in the ordinary course of real estate sales, and/or
Royalty income is derived from subsurface mineral or oil and
from the business of renting other personal property on PA
Schedule C.
gas rights. As a result, the expenses that relate to surface
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rights, such as real estate taxes and insurance are not al-
● Code 5, land. Enter when the property being rented is land.
lowable against royalty income. Mortgage interest is only
● Code 6, royalties. Enter when reporting income result-
allowable if the interest relates directly to the financing of
ing from royalty payments, bonus payments, and dam-
the separately enumerated mineral or oil and gas rights. Ex-
age rents from oil and gas and other mineral
penses that relate directly to the production of royalty in-
extractions or from other royalty payments received
come, such as production costs payments and costs
from other types of property.
related to the negotiation or verification of the lease, are al-
● Code 7, self-rental. Enter when renting property other
lowable. Direct reductions to payments from the lessor,
than real estate rented to a trade or business in which
such as production costs, transmission costs or gathering
there is material participation by the owner.
fees, are allowable and should be itemized under Line 17,
● Code 8, other. Enter when the property is not one of the
Other Expenses.
other types listed above. Enter a brief description of the
Expenses incurred by a landowner to restore a property
property in the space provided on the form or include
damaged by staging areas, rights of way or structures
a statement with the return describing the property.
are allowable expenses. However, expenses incurred by
Enter a brief description that provides additional detail to the
a landowner to improve the property or increase its value
type of property rented. Include the property or building name,
are not allowable.
property or building number or any other description that dis-
CAUTION: Depletion, specifically percentage deple-
tinguishes the property from similar property. Enter the com-
tion, is not an allowable expense for PA personal in-
plete address of the property for each property rented.
come tax purposes. Although cost depletion may be
For rental real estate, the street address, city or town,
allowable, it requires that the landowner has clearly identifi-
able costs incurred with the acquisition of the mineral or oil
state and ZIP code are required to be entered. For oil and
and gas rights. These specific costs are not included within
gas royalties, enter the name of the oil and gas producer
the general acquisition costs of the surface and must be
paying the royalties separately for each 1099-MISC re-
separately enumerated in a purchase agreement in order to
ceived. For all other patent, copyright, or similar property or
clearly identify the depletable amount of oil and gas rights
any other tangible personal rental property, enter the type
from the property.
of source of the income.
Report the amount of royalty income from oil and gas leases
Indicate whether the property is for-profit property or not. PA
separately from any rental income for the same property.
law generally follows the IRC Section 280A for rental or
When reporting royalty income, use the gross amount re-
leased property, such as a vacation home, and there is no
ported on federal Form 1099-MISC. If expenses were de-
intent to realize a profit. In such case, rental expenses may
ducted by the lessee prior to making payments, the
only be deducted up to the amount of rental income, and a
expenses may be recorded and deducted on PA-40 Sched-
loss may not be used to reduce other rental income. If prop-
ule E. No real estate taxes may be deducted against the in-
erty is rented or leased to realize a profit and also not oper-
come from an oil or gas lease and other allowable expenses
ated as a business activity, losses may be offset against
are very limited. Please search for answer ID “2853” in the
other rental or royalty income.
Find Answers section of the Online Customer Service Cen-
IMPORTANT: If the property is located in another
ter on our website.
state or country, the complete address of the property
must be included in the address field.
LINE INSTRUCTIONS
SECTION II
SECTION I
INCOME AND EXPENSES
PROPERTY DESCRIPTION
Enter amounts under the corresponding initial of the property
Enter the property type code from the list of codes provided
from Section I.
on Schedule E. Enter one code only. Additional information
LINE a
regarding the codes for each type of property is as follows:
Indicate the ownership of the property:
● Code 1, single-family residence. Enter when the rental
● Complete the T (taxpayer) oval to indicate the property
period on a single-family residence is 30 days or more.
was owned by and the net income (loss) reported is from
● Code 2, multi-family residence. Enter when the rental
the taxpayer whose name appears on the name line;
period on a property containing multiple living units is
● Complete the S (spouse) oval to indicate the property
30 days or more.
was owned by and the net income (loss) reported is
● Code 3, vacation/short-term rental. Enter when the
from the spouse listed on a PA-40, Personal Income Tax
rental period on a single or multi-family residence or
Return, filed using the Married, Filing Jointly filing sta-
commercial property is less than 30 days. If the property
tus; or
is located in Pennsylvania, you must also collect and
● Complete the J (joint) oval to indicate the property
remit hotel occupancy tax on the fair market value of the
was owned by and the net income (loss) reported is
rental. See Line c instructions for additional information.
from both the taxpayer and spouse.
● Code 4, commercial. Enter when the rental period on
IMPORTANT: One spouse may not use a loss to re-
real estate rented to businesses or organizations is for
30 days or more.
duce the income of the other. Each spouse must
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determine his/her net income (loss) from rents, royalties,
LINE 4
patents and copyrights separately.
LINE b
Enter the ordinary and necessary auto and travel expenses
related to rental activities, including 100 percent of meal ex-
A response to the question regarding whether each property
penses incurred while traveling away from home. Generally,
on which income and/or expenses is being reported is lo-
either the actual vehicle expenses or the standard federal
cated within Pennsylvania must be provided. Fill in the “Yes”
mileage rate may be used as a deduction.
oval if the property is located within Pennsylvania. Otherwise,
fill in the “no” oval.
LINE 5
LINE c
Rental properties with property type 3 typically have rental
Enter the amount of any cleaning and maintenance ex-
periods less than 30 days and require additional considera-
penses for the property.
tions regarding the class of income in which they should be
reported. If the rental of the property includes additional
LINE 6
services being provided to the renters such as those pro-
vided with a bed and breakfast, the rental contract is pro-
Enter the amount of any commissions paid to obtain rentals
cured through an online short-term rental site or the vacation
for the property.
property rental period by a renter is less than 30 days, com-
plete the “yes” oval and report the net income or loss for
LINE 7
such properties on Line 21 and include the amount on Line
4 of the PA-40.
Enter the amount of insurance expense paid for the prop-
erty.
Rental properties with property types 1, 2, 4, 5, 7 and 8, or
a vacation property with a rental period by the same renter
LINE 8
for 30 days or more, are classified as rents. Complete the
“No” oval and report the net income or loss for such proper-
Enter any legal and professional fees paid for the property.
ties on Line 22.
LINE 9
LINE 1
Enter the amount of any management fees paid for the prop-
Enter the gross rent from the rental of real estate or other
erty.
tangible personal property (including personal property
leased with real estate) held for investment or speculation.
LINE 10
Include income received for renting a room or other space.
If services or property were received as a substitution for
Enter the amount of mortgage interest paid for the current
rent paid in cash or cash equivalents, report the fair market
year to banks or other financial institutions.
value of such services or property as rental income.
LINE 11
LINE 2
Enter the interest paid on the purchase of other property.
Enter the gross royalties from oil, gas, mineral properties,
Generally, to determine the interest expense allocable to the
and other property. Oil and gas royalty payments received
rental activities, records to show how the proceeds of each
from mineral rights located under a farm are not considered
debt were used must be present. Pennsylvania does not fol-
farm income and should be reported on PA Schedule E.
low federal rules regarding prepaid interest.
CAUTION: Property damages resulting from the con-
LINE 12
struction of temporary structures such as staging
areas are taxable as rental income on Schedule E. Most
Enter the cost of repairs made to keep a property in good
contracts require the lessor to mitigate damage and restore
working condition. Repairs (fixing a broken lock or painting
the property to its original condition, thus no “damage” ac-
a room) generally do not add significant value to the property
tually occurs. Payments received for the granting of a per-
or extend its life. Improvements that increase the value of
manent right of way or an express easement of 15 years or
the property or extend its life (such as replacing a roof or
more should be reported on Schedule D as a gain of the
sale or disposition of property. Otherwise, payments re-
renovating a kitchen) must be capitalized. Such costs can-
ceived for temporary access to another property for a tem-
not be expensed in full in the year paid or incurred.
porary easement or right of way are included as rental
LINE 13
income. Report the amount of royalty income from oil and
gas leases separately from any rental income for the same
Enter the cost of supplies purchased for a property.
property. When reporting royalty income, use the gross
amount of income reported on federal Form 1099-MISC.
LINE 14
LINE 3
Enter the amount of taxes paid that are directly related to
Enter the amount of any advertising expense incurred to no-
the rental activity. Deduct the proportionate share of real es-
tify potential renters of the property’s availability for rental.
tate taxes. Taxes based on income may not be deducted.
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