Schedule E vs. Form 8825

There may not be a choice. How is the real estate owned? By one person, by more than one? If one person, Schedule E is the only choice. If it is owned by two spouses, you then have to ask if it is owned in their names or through an LLC they own. If an LLC, then a partnership return is the only choice. If they own it jointly in their own names, they can file as a partnership (Form 1065) or as a joint venture (Form 1040).

If they are using a paid preparer, the cost to prepare a partnership return will be much higher than the cost of a Schedule E.

Ira Smilovitz, EA

Thanks Ira. That's very helpful.

Spouses who file jointly and own rental property jointly fie a 1040 with a single Schedule E. It is not a qualified joint venture unless it is a business that would normally go on a Schedule C.

Ah, good point. I hadn't thought of that, but it makes sense.

Thanks!

In the latter case, if the LLC is held as community property, it may be treated as disregarded and reported directly on Schedule E.