The IRS’s December 2025 revision of Form 8825 applies to tax years beginning in 2025. Changes include separate reporting of gross rents and other rental income, updated property information codes, and a new Schedule A for certain other deductions. Preparers should consult the official IRS instructions for the applicable tax year.
Form 8825 is used by partnerships and S corporations to report rental real estate income and deductible expenses. It calculates the income or loss associated with individual rental properties and the entity’s overall rental real estate activities. The resulting amount generally flows to Schedule K of Form 1065 or Form 1120-S.
Key Facts at a Glance
Purpose
Report rental real estate income and deductible expenses.
Who uses it
Partnerships and S corporations with reportable rental real estate activities.
Related returns
Form 1065 and Form 1120-S.
Key records
Rental receipts, expense invoices, property details, and depreciation schedules.
Important distinction
An entity's reported rental loss may be subject to additional deduction limitations at the owner level.
Quick Read
Rental real estate reporting requires accurate property-level accounting, appropriate expense classification, and reliable supporting documentation. Form 8825 brings these details together for partnerships and S corporations. This guide explains who uses the form, how to complete its principal sections, which expenses require additional scrutiny, and how accounting teams can improve reporting accuracy before filing the entity’s tax return.
Introduction
Form 8825 is the IRS form partnerships and S corporations use to report rental real estate income and deductible expenses. The form calculates net income or loss for individual properties and combines the results for reporting on the entity’s tax return.
For property-owning businesses, preparing the form involves more than recording rent collected and subtracting operating costs. Accountants must verify rental receipts, classify expenses, calculate depreciation, identify personal-use days, and reconcile property-level records with the general ledger.
The Form 8825 instructions are particularly important for businesses managing multiple properties because each property must be reported separately, even when several properties belong to one activity for passive activity tax purposes.
Understanding these requirements helps business owners, controllers, and accounting firms reduce avoidable reporting errors. It also creates a more dependable process for preparing Form 1065 or Form 1120-S and providing accurate rental activity information to partners or shareholders.
What Is Form 8825 and Who Needs to File It?
Form 8825, officially titled Rental Real Estate Income and Expenses of a Partnership or an S Corporation, reports rental real estate income and deductible expenses for qualifying activities conducted through these entities.
The form is attached to Form 1065 for partnerships or Form 1120-S for S corporations. Its net rental real estate income or loss generally flows to Schedule K, line 2, of the applicable return.
Who should use the form?
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Taxpayer or entity
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General reporting approach
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Partnership owning rental real estate
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Uses Form 8825 to report qualifying rental real estate income and expenses.
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S corporation owning rental real estate
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Uses Form 8825 and reports the results through Form 1120-S.
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Individual landlord
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Generally reports rental real estate income and expenses on Schedule E of Form 1040, subject to applicable rules.
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Business operating a rental-related service
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May need to report the activity elsewhere, depending on its nature and tax classification.
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Form 8825 is not intended for every type of rental or business income. The IRS instructions exclude certain trade or business activities, portfolio items, Section 179 deductions, and other items requiring separate reporting.
The distinction between property reporting and activity classification is also important. A partnership may own two apartment buildings that are grouped into one activity for passive activity limitation purposes. Nevertheless, the partnership generally reports the income and expenses for each building in separate columns on Form 8825.
This property-level detail helps preparers identify discrepancies and maintain clear supporting records.
How Do You Complete Form 8825?
The form follows a structured process, beginning with property identification and ending with the calculation of rental income or loss.
Step 1: Identify each property
Enter the property's physical address and the appropriate property-type code. The IRS provides codes for single-family residences, multifamily residences, vacation or short-term rentals, commercial property, land, royalties, self-rentals, and other property types. The form also asks for the number of days the property was rented at fair rental value and the number of personal-use days. These figures may affect the application of special rules for mixed rental and personal use. The revised form includes an additional information code field for partnerships and S corporations required to file Schedule M-3. Those entities should follow the relevant instructions when reporting property acquisitions, dispositions, and other specified transactions.
Step 2: Record rental income
Under the December 2025 revision, line 2a captures gross rents, while line 2b captures other income related to rental real estate activity. Line 2c records total rental real estate income for each property. Reconcile these amounts with lease agreements, tenant ledgers, bank deposits, and property management statements. Differences should be investigated rather than automatically treated as timing differences or bookkeeping errors.
Step 3: Classify rental expenses
The form provides separate lines for advertising, auto and travel, cleaning and maintenance, commissions, insurance, interest, professional fees, real estate taxes, repairs, utilities, wages and salaries, depreciation, and other deductions. Each amount should be supported by records and classified under the applicable tax rules. Significant property expenditures deserve particular scrutiny because an improvement may need to be capitalized rather than deducted as a current repair expense.
Step 4: Calculate the net result
For each property, subtract total rental real estate expenses from total rental real estate income. The form then combines the property results and applicable pass-through rental real estate amounts to determine the overall net rental real estate income or loss. The final amount generally transfers to Schedule K, line 2, of Form 1065 or Form 1120-S. Additional activity-level reporting may be required when the entity has multiple rental activities for passive activity limitation purposes.
Step 5: Reconcile the completed form
Before filing, compare Form 8825 with the general ledger, supporting schedules, and relevant sections of the entity return. Confirm that the rental income, expense totals, depreciation, and activity-level information agree with the underlying records. For entities with more than four rental properties, the revised form provides additional property entries on page 2, with further pages attached when necessary.
Which Rental Income and Expenses Belong on Form 8825?
Accurate classification determines whether the form reflects the property’s actual tax reporting position.
Rental income
Rental income generally includes gross rents and other income related to rental real estate activity. Preparers should review rental agreements, tenant charges, property management reports, and other supporting records to establish that receipts are complete and properly categorized.
Deductible expenses
Deductible expenses may include qualifying insurance, interest, real estate taxes, repairs, utilities, professional fees, and depreciation. The expenses must relate to the rental activity and satisfy the applicable tax requirements.
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Expense Category
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What Accountants Should Review
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Insurance
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Confirm the policy relates to the property and the appropriate period.
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Interest
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Reconcile lender statements and evaluate applicable interest limitations.
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Real estate taxes
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Verify amounts against property tax statements and payment records.
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Repairs
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Determine whether costs are deductible repairs or capital improvements.
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Utilities and maintenance
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Confirm the expenses relate to rental operations and are documented.
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Depreciation
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Review asset basis, placed-in-service dates, improvements, and recovery periods.
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Professional fees
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Identify fees attributable to the rental activity and classify them appropriately.
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Depreciation deserves particular attention. Land is not depreciable, and the depreciable basis of a building must be determined separately from the land. Qualifying improvements may also require separate asset records and depreciation calculations.
Practical example: A partnership owns two commercial properties. One requires routine plumbing repairs, while the other receives a substantial building improvement. Treating both expenditures as current repairs without examining their nature could produce an incorrect deduction. Reviewing invoices and documenting the work helps determine the appropriate tax treatment.
A reported rental loss also does not automatically mean every partner or shareholder can deduct that amount immediately. Passive activity limitations and other applicable tax provisions may restrict deductions at the owner level.
What Common Form 8825 Reporting Errors Should You Avoid?
Several recurring accounting issues can undermine the accuracy of rental real estate reporting.
Combining property records
Recording all properties in a single undifferentiated account makes it harder to identify missing expenses, unusual balances, and property-specific discrepancies. Separate property-level records provide a clearer audit trail.
Misclassifying improvements
Deducting capital improvements as ordinary repairs can overstate current expenses. Establish a review process for significant expenditures and retain invoices describing the work performed.
Overlooking depreciation
Missing asset additions, disposals, or placed-in-service dates can affect depreciation calculations. Reconcile the fixed-asset schedule with the general ledger and current-year property activity.
Failing to reconcile rental income
Rental receipts may differ from the amounts recorded in the books because of timing differences, tenant balances, or incomplete entries. Investigate discrepancies using bank statements, leases, and property management reports.
Ignoring personal-use information
Properties used personally by owners or related individuals may be subject to special tax rules. Maintain accurate records of fair-rental days and personal-use days.
Confusing property reporting with activity grouping
The number of properties reported on Form 8825 may differ from the number of activities used for passive activity limitation purposes. Review the relevant instructions and provide additional activity-level information when required.
A consistent year-end review should cover income completeness, expense classification, depreciation, property details, supporting documents, and reconciliation with the entity return. Resolving these issues before filing reduces avoidable rework and improves the reliability of the final return.
How Can Businesses Improve Rental Real Estate Tax Reporting?
Accurate reporting begins with consistent bookkeeping throughout the year rather than a last-minute effort to assemble documents before the filing deadline.
Businesses should maintain separate property records, reconcile rental receipts regularly, document significant expenditures, and update fixed-asset schedules as properties are improved or disposed of. Centralizing leases, invoices, tax bills, insurance records, lender statements, and property management reports also makes supporting evidence easier to retrieve.
For accounting firms, a standardized tax preparation checklist can improve consistency across client engagements. The workflow should include income reconciliation, expense review, depreciation verification, property information checks, and a final reconciliation with Form 1065 or Form 1120-S.
Some firms use outsourcing tax preparation to manage workload during peak filing periods. This arrangement can provide additional preparation capacity, but it works best when workpapers are standardized, instructions are clear, documents are exchanged securely, and review responsibilities are defined.
External support should complement—not replace—technical review and appropriate oversight. The firm remains responsible for evaluating the return, resolving open questions, and ensuring that the final filing is accurate.
How KMK Associates Helps
KMK Associates supports accounting workflows with an emphasis on accurate records, consistent financial reporting, and dependable preparation processes. For partnerships and S corporations with rental real estate activities, organized bookkeeping and supporting schedules can make Form 8825 preparation more manageable.
Support may include reconciling rental income, organizing property-level expenses, maintaining supporting schedules, coordinating depreciation information, and preparing workpapers for review. Consistent documentation helps accounting teams identify missing information and investigate discrepancies before they affect the entity’s tax return.
For CPA firms handling multiple client engagements, outsourcing tax preparation can provide additional capacity when internal teams face competing deadlines. Effective coordination requires clear instructions, secure document exchange, defined review procedures, and timely communication about exceptions.
The objective is to improve workflow consistency while helping accounting professionals maintain visibility over outstanding questions and documentation gaps. The appropriate scope of support depends on each client’s requirements, records, and engagement arrangements.
Need Help with Rental Real Estate Tax Preparation?
Professional support can improve reporting accuracy and streamline tax preparation workflows.
Conclusion
Form 8825 is a key component of rental real estate tax reporting for partnerships and S corporations. Preparing it accurately requires complete property-level records, appropriate expense classification, reliable depreciation calculations, and reconciliation with the entity’s tax return.
Businesses should treat rental reporting as an ongoing accounting responsibility rather than a year-end data-entry exercise. Consistent real estate bookkeeping and documented review procedures help identify discrepancies before filing and make supporting information easier to retrieve.
Accounting firms managing multiple rental property entities can also benefit from standardized workpapers and additional preparation capacity when needed. By strengthening these processes, businesses and their advisors can improve reporting consistency and reduce avoidable rework during tax season.
FAQs about Form 8825
Form 8825 reports rental real estate income and deductible expenses for partnerships and S corporations. It calculates net rental real estate income or loss, which generally flows to Schedule K of Form 1065 or Form 1120-S before being reported to the entity's owners under applicable rules.
Partnerships and S corporations use IRS Form 8825 to report qualifying rental real estate activities. Individual landlords generally report rental income and expenses on Schedule E of Form 1040, subject to applicable requirements. The correct reporting method depends on the taxpayer's classification and the nature of the activity.
Potential expenses include qualifying insurance, interest, real estate taxes, repairs, utilities, professional fees, and depreciation. Each deduction must satisfy applicable tax requirements and be supported by appropriate records. Capital improvements, personal expenses, and costs associated with other activities require careful classification.
Form 8825 calculates rental real estate income or loss for a partnership. The resulting amount generally appears on Schedule K, line 2, of Form 1065 and is subsequently reported to partners through Schedule K-1, subject to applicable reporting requirements and tax limitations.
Outsourcing tax preparation can help accounting firms manage workloads and recurring return preparation tasks. Its effectiveness depends on complete documentation, standardized workpapers, secure information exchange, and appropriate review. The arrangement should preserve accountability for technical decisions, return approval, and filing responsibilities.
What Next?
Still have questions? That’s where KMK comes in. KMK Associates can support accounting teams with organized workpapers, reliable bookkeeping processes, and tax preparation workflow assistance. If your team needs help managing rental property records or preparing information for Form 8825, contact KMK Associates to discuss a support arrangement aligned with your requirements.
