Page 247 - Individual Forms & Instructions Guide

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The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.
ing the difference. In the space to the charges) for local telephone service for you can divide the cost between them
left of line 12, enter “See attached.” the first telephone line into your resi- based on their assessed values for real
dence is a personal expense and is not estate tax purposes.
Note. If the recipient was not a finan- deductible.
cial institution or you did not receive a Line 19
Form 1098 from the recipient, report Line 18
your deductible mortgage interest on Depreciation is the annual deduction Enter on line 19 any ordinary and neces-
sary expenses not listed on lines 5
line 13. you must take to recover the cost or oth- through 18.
If you and at least one other person er basis of business or investment prop-
(other than your spouse if you file a joint erty having a useful life substantially be- You may be able to deduct, on
return) were liable for and paid interest yond the tax year. Land is not deprecia- line 19, part or all of the cost of modify-
on the mortgage, and the other person ble. ing existing commercial buildings to
received Form 1098, report your share make them energy efficient. For details,
of the deductible interest on line 13. At- Depreciation starts when the property see section 179D, Form 7205 and its
tach a statement to your return showing is available and ready for use in your separate instructions, and Rev. Proc.
the name and address of the person who business or for the production of in- 2022-14, 2022-7 I.R.B. 580, available at
received Form 1098. On the dotted line come. It ends when you deduct all your Rev. Proc. 2022-14.
next to line 13, enter “See attached.” depreciable cost or other basis or no lon-
ger use the property in your business or Line 21
Line 14 for the production of income. If you have amounts for which you are

You can deduct the amounts paid for re- See the Instructions for Form 4562 to not at risk, use Form 6198 to determine
pairs and maintenance. However, you figure the amount of depreciation to en- the amount of your deductible loss. En-
cannot deduct the cost of improvements. ter on line 18. ter that amount in the appropriate col-
Repairs and maintenance costs are those You must complete and attach Form umn of Schedule E, line 21. In the space
costs that keep the property in an ordina- 4562 only if you are claiming: to the left of line 21, enter “Form 6198.”
rily efficient operating condition. Exam- • Depreciation on property first Attach Form 6198 to your return. For
ples are fixing a broken lock or painting placed in service during 2022; details on the at-risk rules, see At-Risk
a room. • Depreciation on listed property Rules, earlier.
In contrast, improvements are (defined in the Instructions for Form Line 22
amounts paid to better or restore your 4562), including a vehicle, regardless of
property or adapt it to a new or different the date it was placed in service; or Do not complete line 22 if the amount
use. Examples of improvements are add- • A section 179 expense deduction on line 21 is from royalty properties.
ing substantial insulation or replacing an or amortization of costs that began in If you have a rental real estate loss
entire HVAC system. Amounts paid to 2022. from a passive activity (defined earlier),
improve your property must generally See Pub. 527 for more information on the amount of loss you can deduct may
be capitalized and depreciated (that is, depreciation of residential rental proper- be limited by the passive activity loss
they cannot be deducted in full in the ty. See Pub. 946 for a more comprehen- rules. You may need to complete Form
year they are paid or incurred). See sive guide to depreciation. 8582 to figure the amount of loss, if any,
Line 18, later. to enter on line 22. See the Instructions
If you have an economic interest in for Form 8582 to determine if your loss
Line 16 mineral property, you may be able to is limited.
take a deduction for depletion. Mineral
Do not reduce your deduction property includes oil and gas wells, If your rental real estate loss is not
! for social security and Medi- mines, and other natural deposits (in- from a passive activity or you meet the
CAUTION care taxes by the nonrefunda- cluding geothermal deposits). See Pub. exception for certain rental real estate
ble and refundable portions of the 535 for details. activities (explained earlier), you do not
FFCRA and ARP credits for qualified Separating cost of land and buildings. have to complete Form 8582. Enter the
sick and family leave wages claimed on If you buy buildings and your cost in- (loss) from line 21 on line 22.
an employment tax return. Instead, re- cludes the cost of the land on which they If you have an unallowed rental real
port the credits as income on line 3 or 4, stand, you must divide the cost between estate loss from a prior year that after
as applicable. the land and the buildings to figure the completing Form 8582 you can include
basis for depreciation of the buildings. this year, include that loss on line 22.
Line 17 The part of the cost that you allocate to
each asset is the ratio of the fair market
You can deduct the cost of ordinary and value of that asset to the fair market val-
necessary telephone calls related to your ue of the whole property at the time you Parts II and III
rental activities or royalty income (for buy it.
example, calls to the renter). However, If you need more space in Part II or III
the base rate (including taxes and other If you are not certain of the fair mar- to list your income or losses, attach a
ket values of the land and the buildings, continuation sheet using the same for-

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