Schedule E expense categories for rental property, line by line
Schedule E (Form 1040) has fifteen expense lines, numbered 5 to 19, and one column per property. If your books use those same fifteen categories all year, filling in the return is a matter of copying totals. This guide explains what belongs on each line, the repair versus improvement question that trips most owners up, and how to set up your books so tax time is short.
What Schedule E is
Schedule E is the IRS form where individuals report income and expenses from rental real estate, among other things. Each rental property gets its own column, with rents received on line 3 and expenses on lines 5 to 19. The result for each property flows to your Form 1040. A single-member LLC that has not chosen to be taxed as a corporation is usually reported on its owner's Schedule E; multi-member LLCs usually file a partnership return instead. Ask your tax preparer which applies to you.
The IRS describes the form and its rules in the Instructions for Schedule E and in Publication 527, Residential Rental Property.
The expense lines
These are the expense lines as printed on the 2025 Schedule E, with what usually goes on each for an apartment building.
| Line | Name on the form | What usually goes there |
|---|---|---|
| 5 | Advertising | Listing fees, signs, paid ads for vacant units |
| 6 | Auto and travel | Trips to the property, at actual cost or the standard mileage rate |
| 7 | Cleaning and maintenance | Cleaning between tenants, landscaping, snow removal, pest control |
| 8 | Commissions | Leasing commissions paid to an agent |
| 9 | Insurance | Property and liability insurance for the building |
| 10 | Legal and other professional fees | Bookkeeping, tax preparation for the rental, eviction filing fees |
| 11 | Management fees | Fees paid to a property manager |
| 12 | Mortgage interest paid to banks, etc. | Interest on the property's loan from a bank (not the principal) |
| 13 | Other interest | Interest paid to a lender that is not a bank, such as a seller who financed the sale |
| 14 | Repairs | Work that keeps the property in working order: a broken lock, a leak, a repainted room |
| 15 | Supplies | Small items used up in running the property: light bulbs, filters, cleaning supplies |
| 16 | Taxes | Property taxes on the building |
| 17 | Utilities | Water, sewer, trash, common-area electricity and gas the owner pays |
| 18 | Depreciation expense or depletion | The yearly share of the building and improvements, from Form 4562 |
| 19 | Other | Anything ordinary and necessary that fits no line above, listed by name |
Line 20 is the total of lines 5 to 19, and line 21 is rents and royalties (line 3 and 4) minus that total.
Repair or improvement: the line that matters most
The IRS instructions draw a clear line. A repair keeps the property in efficient working order, like fixing a broken lock or painting a room, and is deducted on line 14 in the year you pay it. An improvement betters or restores the property or adapts it to a new use, like adding substantial insulation or replacing an entire heating and cooling system. An improvement is generally capitalized and depreciated over years, so it shows up on line 18 a little at a time instead of all at once.
Example a made-up 12 unit building spends $1,800 replacing a failed water heater part and $9,500 replacing every window in one unit. The $1,800 part keeps the heater working, so it is a repair on line 14 this year. The $9,500 of new windows betters the unit, so it is an improvement that is depreciated. Your tax preparer decides the final treatment; your books only need to keep the two apart.
The practical rule for your books: give improvements their own account, separate from repairs, and attach the invoice. Sorting them out in March from one big "repairs" total is where most of the cost of a rental tax return comes from.
Common mistakes
- Putting the whole mortgage payment on line 12. Only the interest goes there. Principal is not an expense, and escrowed taxes and insurance belong on lines 16 and 9.
- Deducting a security deposit you are holding. A deposit you may have to return is not income or an expense. It becomes income only when you keep some of it, for example for damage or unpaid rent.
- Mixing properties. Each property has its own column. If one LLC owns one building, its bank account and its books should hold only that building's money.
- Lumping everything into Other. Line 19 is for what truly fits nowhere else, and each item should be named.
Set up your books to match the form
The simplest setup is a chart of accounts whose expense accounts are the fifteen Schedule E lines, with repairs and improvements kept apart and each property in its own set of books. Record every bank line in one of those accounts as it happens, attach receipts, and close each month. At year end, the profit and loss report for each property is already in Schedule E order.
- Open one bank account per property, or per LLC if one LLC owns one property.
- Use the Schedule E lines as your expense accounts, plus a separate account for improvements.
- Categorize every transaction monthly, not yearly.
- Keep invoices for anything over a few hundred dollars, so the repair or improvement call is easy later.
- Give your tax preparer one profit and loss report per property.
How DoorKeeping handles it
In DoorKeeping, each property's LLC keeps its own books, and every expense account maps to a Schedule E line. You can ask your AI app for a property's profit and loss or its net operating income at any time, and see every property together. DoorKeeping prepares your numbers; it does not file your return or give tax advice, so your tax preparer still signs off.
Sources
- IRS, Instructions for Schedule E (Form 1040), 2025, read Oct 29, 2026
- IRS, Schedule E (Form 1040), 2025, read Oct 29, 2026
- IRS, Publication 527, Residential Rental Property, read Oct 29, 2026
Questions
- Where do I put the mortgage on Schedule E?
- Only the interest goes on Schedule E, on line 12 when it was paid to a bank. Principal is not deductible, and escrowed property taxes and insurance go on lines 16 and 9.
- Is a new roof a repair on Schedule E?
- Usually not. Replacing a whole roof generally betters or restores the property, so it is an improvement that is depreciated over time. Patching a leak is a repair. Your tax preparer makes the final call.
- Do I need a separate Schedule E column for each building?
- Yes. Schedule E gives each rental property its own column, so keeping separate books for each property makes the return a copy job.