Schedule E, Line by Line: The Plain-English Guide for Small Landlords (2026)
Schedule E Part I is three things: rents received on line 3, expenses on lines 5–19, and the difference on line 21. The work is putting each expense on the right line all year, not in April.
Two rules cause most of the errors: mortgage principal is never an expense (only the interest on line 12), and improvements are not repairs — a new roof gets depreciated rather than deducted on line 14.
The short version
- Line 3 is rent actually received; deposits you're still holding are not income.
- Line 12 is mortgage interest only — principal never appears anywhere on the form.
- Line 14 is repairs; capital improvements belong on a separate list for your tax pro.
- 2026 mileage: 72.5¢ per mile through June 30, 76¢ from July 1 — a rare mid-year change.
- Line 19 (“Other”) holds real money: HOA dues, bank fees, software, education.
Every spring, thousands of self-managing landlords sit down with a pile of receipts and one question: where does this go?
Schedule E (Form 1040) is the page where your rental's whole year gets reported — and it's less scary than it looks. Part I is just three things: what came in (line 3), what went out (lines 5–19), and the difference (line 21). The art is putting each expense on the right line all year long, so April is a printout instead of an archaeology dig.
Here's every line, in the words your receipts actually use.
The income line
Line 3 — Rents received. Everything tenants actually paid you this year. Not security deposits you're still holding — those aren't income until you keep some of one.
The expense lines, 5 through 19
5 — Advertising. Listing fees, promoted posts, yard signs, listing photos.
6 — Auto and travel. Trips for your rental: showings, meeting the plumber, the hardware-store run. Most small landlords use the IRS standard mileage rate — and 2026 is a year to pay attention: 72.5¢/mile January–June, then 76¢/mile from July 1, a rare mid-year increase. If you use the mileage rate, you don't also deduct gas and car repairs — it's one method or the other.
7 — Cleaning and maintenance. Turnover cleans, lawn care, gutters, snow removal.
8 — Commissions. Paid a leasing agent half a month's rent for placing a tenant? Here.
9 — Insurance. Your landlord policy, umbrella liability. (A refund or bundling credit? Log it as a negative in the same category.)
10 — Legal and other professional fees. The attorney who reviewed your lease, your CPA, tax prep for the rental part of your return.
11 — Management fees. Property managers — and the modern equivalents, like rent-collection app fees.
12 — Mortgage interest paid to banks. The interest from your lender's Form 1098. Only the interest. The principal part of your payment is never an expense — the single most common small-landlord bookkeeping error.
13 — Other interest. Interest on a credit card or loan used for the rental.
14 — Repairs. Fixing what broke: the faucet, the dead outlet, the disposal. Keep reading before you put a roof here.
15 — Supplies. Furnace filters, batteries, touch-up paint, small hardware.
16 — Taxes. Property taxes on the rental.
17 — Utilities. Any you pay: water, trash, common-area electric, gas.
18 — Depreciation. The big, strange, wonderful one — you deduct a slice of the building's cost every year. The math (cost basis, land value, the 27.5-year schedule, improvements) is genuinely your tax professional's job. Your job is handing them clean records.
19 — Other. The catch-all with real money in it: HOA dues, bank fees on the rental account, landlord software, landlord books and courses.
Line 20 adds up 5–19; line 21 subtracts it from your rents. That's the page.
The trap that catches everyone: repairs vs. improvements
Fixing what broke = a repair — deduct it this year on line 14. But a new roof, a new appliance, a remodel = an improvement — it generally gets depreciated over years instead of deducted now. Stuffing a $9,000 roof into "Repairs" is the classic small-landlord audit trigger.
The habit that saves you: when you log an improvement, flag it and keep it on its own list, off your expense lines. Hand that list to your tax pro — they'll handle the depreciation.
What never goes on Schedule E
Mortgage principal. Security deposits you're holding. The value of your own labor. The personal share of anything used part-personally — your whole phone bill is not a rental expense; the landlord portion is.
Make next April boring
The landlords who breeze through tax season all do the same thing: they file each expense under its Schedule E line the week it happens, not in a March panic. A folder of receipts sorted into fifteen named buckets is 90% of the battle.
Skip the build-it-yourself weekend
Landlord Ledger Toolkit includes all of this, pre-built and checked — the Rent Tracker, the Schedule E Expense Log, and the rest of the bundle: 4 Excel workbooks, 3 editable Word templates and a printable PDF, for landlords with 2–10 units. The 2026 IRS mileage rates come preloaded, in editable cells you can update in later years. Excel + Google Sheets, one-time purchase.
Want the 1-page version?
The free Landlord Tax Deductions Cheat Sheet puts every Schedule E line, the repairs-vs-improvements trap, and the most-missed write-offs on a single printable page.
Questions landlords ask about this
Does mortgage principal go on Schedule E?
No. Only the interest portion of your mortgage payment is deductible, on line 12, taken from your lender's Form 1098. The principal portion is a repayment of borrowed money and never appears as an expense.
Are security deposits rental income?
Not while you are holding them. A deposit becomes income in the year you keep some or all of it — for example when you apply it to unpaid rent or to damage at move-out.
What are the 2026 IRS standard mileage rates for landlords?
For 2026 the business standard mileage rate is 72.5 cents per mile from January 1 to June 30 and 76 cents per mile from July 1 to December 31, following a mid-year adjustment. If you use the standard mileage rate you do not also deduct gas and vehicle repairs.
What goes on line 19, Other expenses?
The items with no line of their own: HOA and condo dues, bank fees on the rental account, landlord software subscriptions, and landlord education such as books and courses.
What is the difference between a repair and an improvement on Schedule E?
A repair fixes what broke and is generally deducted this year on line 14. An improvement betters the property, adapts it to a new use, or replaces a major component, and is generally capitalized and depreciated over years instead. Several safe harbors can allow smaller improvements to be expensed.
Educational information, not tax advice. Every situation differs — confirm with a tax professional. Mileage rates per IRS Notice 2026-10 and Announcement 2026-11.