When a partnership or S corporation owns rental real estate, that activity is generally reported on Form 8825 rather than mixed into ordinary business income on the entity return. Form 8825 reports rental real estate income and deductible expenses and feeds the net result into Schedule K of Form 1065 or Form 1120-S, then to each owner’s Schedule K-1.
What Is IRS Form 8825?
Form 8825, Rental Real Estate Income and Expenses of a Partnership or an S Corporation, is the IRS schedule partnerships and S corporations use to report rental real estate income and deductible expenses, including net income or loss from rental real estate activities that flow through from partnerships, estates, or trusts.
For tax years beginning in 2025, the IRS says taxpayers should use the December 2025 revision of Form 8825. That is the version used during the 2026 filing season.
Who Must File Form 8825?
Form 8825 is used by partnerships and S corporations. Individuals who own rental property directly generally report it on Schedule E, and C corporations do not use Form 8825.
Entities that typically use Form 8825
- Partnerships filing Form 1065
- S corporations filing Form 1120-S
Entities that do not use Form 8825
- Individuals reporting rental activity on Schedule E
- Sole proprietors and single-member LLCs disregarded for federal tax purposes
- C corporations filing Form 1120
When Is Form 8825 Due in 2026?
Form 8825 is filed with the entity’s return, so it follows the filing deadline for Form 1065 or Form 1120-S. For calendar-year 2025 returns, calendar-year partnerships may timely file by March 16, 2026, and calendar-year S corporations are also due March 16, 2026, because March 15 falls on a Sunday. Businesses that need more time generally request an automatic extension by filing Form 7004 by the regular due date of the return. Form 7004 extends the time to file, not the time to pay tax due.
How Form 8825 Works
Form 8825 is not a standalone form. It attaches to Form 1065 or Form 1120-S. The net rental real estate income or loss from Form 8825 goes to Schedule K, line 2, of the entity return. From there, each partner’s or shareholder’s share is reported on Schedule K-1, box 2.
The December 2025 revision also confirms that the redesigned form accommodates up to eight properties across its two pages. If the entity has more than eight rental real estate properties, additional pages must be attached.
Property Type Codes on Form 8825
For each property, Form 8825 requires a property-type code in column (b). The allowable codes are:
- Single-family residence
- Multi-family residence
- Vacation or short-term rental
- Commercial
- Land
- Royalties
- Self-rental
- Other
If Code 8 is used, include a description on Form 8825 or on a separate statement.
What Changed on Form 8825 for 2026 Filing Season?
The major changes for returns filed in 2026 come from the December 2025 revision of Form 8825. The IRS specifically says to report gross rents and other rental-related income separately on lines 2a and 2b, and it introduced Schedule A (Form 8825) for certain filers with a Schedule M-3 filing requirement. The IRS also added new column (c) codes for certain acquisitions, dispositions, and related transactions.
Gross rents and other income must now be shown separately
The IRS now requires rental real estate gross rents and other income related to rental real estate activity to be reported separately on lines 2a and 2b. That means gross rents belong on line 2a, while other rental-related income belongs on line 2b.
Expense lines changed
The updated form separately lists wages and salaries on line 13, depreciation on line 14, and other deductions on line 17. Lines 15 and 16 are reserved for future use.
New Schedule A (Form 8825) for certain filers
If a partnership or S corporation is required to file Schedule M-3, it must use Schedule A (Form 8825), Rental Real Estate Other Deductions, to report other deductions and include that total on Form 8825, line 17.
Additional codes for certain transactions
Column (c) on line 1 is required only for partnerships and S corporations with a Schedule M-3 filing requirement. The allowable codes for other information are:
A: Nontaxable contribution (sections 721 and 351)
B: Other exchange (sections 1031, 1033, etc.)
C: Taxable acquisition (section 1012)
D: New construction, renovation, or other basis addition or subtraction
E: Reserved for future use
F: Nontaxable distribution (section 731)
G: Taxable disposition (section 1001 gain or loss)
H: Abandonment
I: Other or supplement
What Counts as Rental Real Estate Income on Form 8825?
Form 8825 now separates income into two categories.
Line 2a: Gross rents
In the Line 2a is for gross rents from the property.
Line 2b: Other income related to rental real estate activity
Line 2b is for other income related to the rental activity. Depending on the facts and bookkeeping, that can include income items tied to the rental activity that are not gross rents.
Line 2c: Total rental real estate income
Line 2c is the total of lines 2a and 2b for each property.
What Expenses Go on Form 8825?
The 2025 revision of Form 8825 lists the following expense categories on lines 3 through 17:
- Advertising
- Auto and travel
- Cleaning and maintenance
- Commissions
- Insurance
- Interest
- Legal and other professional fees
- Real estate taxes
- Repairs
- Utilities
- Wages and salaries
- Depreciation
- Other deductions
For line 14, depreciation is figured under the regular depreciation rules, and Form 4562 must be attached when required. The IRS instructions specifically state that land is not depreciable.
Depreciation Rules That Matter
For residential rental property, the general MACRS recovery period is 27.5 years. For nonresidential real property, the general recovery period is 39 years. Land is not depreciable and must be separated from the building when figuring depreciation.
One important reporting point: the IRS instructions for Form 8825 specifically say not to report section 179 expense deductions on Form 8825. Those items must be reported separately to partners or shareholders when applicable.
Schedule A (Form 8825): Who Has to File It?
Schedule A (Form 8825) is not required for every filer. It applies to partnerships and S corporations with a Schedule M-3 filing requirement.
The IRS instructions for Schedule M-3 generally tie that requirement to entities with total assets of $10 million or more, with additional rules for some partnerships.
Schedule A requires more detailed categorization of other deductions. The current IRS Schedule A includes lines for asset management fee, bad debt expense, building maintenance, common charges, contract services, debt extinguishment costs, ground rent, grounds maintenance, homeowner association fee, incentive fee, landscaping, leased employee expense, management fee, other taxes, prepayment penalty, reimbursed wages and salaries paid to a management company, section 481(a) adjustments, tenant renovations, tenant services, turnover expenses, and an Other line.
How Self-Rental Fits Into Form 8825
Code 7 is for self-rental. On the IRS form, that code identifies a self-rental property, but the passive-versus-nonpassive result is generally determined at the owner level under the passive activity rules.
The IRS explains that if you rent property to a trade or business activity in which you materially participated, net rental income from the property is treated as nonpassive income. That makes self-rental an area that deserves careful review whenever the property is connected to an owner-operated business.
Passive Activity Loss Rules and Real Estate Professional Status
The IRS generally treats rental activities as passive activities, even if the taxpayer materially participates, unless the taxpayer qualifies as a real estate professional. That means rental losses may be limited and carried forward under the passive activity rules.
To qualify as a real estate professional, an individual must meet both of these tests:
More than half of the personal services performed in all trades or businesses during the tax year were performed in real property trades or businesses in which the individual materially participated
The individual performed more than 750 hours of services during the tax year in real property trades or businesses in which the individual materially participated
This determination is made at the owner level, not on Form 8825 itself.
Common Form 8825 Mistakes to Avoid
Combining gross rents and other income
The revised form requires gross rents and other rental-related income to be shown separately on lines 2a and 2b.
Using outdated line references
A lot of older guidance still uses pre-2025 line references. The current form has wages and salaries on line 13, depreciation on line 14, and other deductions on line 17, with lines 15 and 16 reserved.
Reporting too many properties without attachments
The current form accommodates up to eight properties across two pages. If the entity has more than eight properties, attach additional pages.
Claiming depreciation on land
Land is not depreciable under IRS rules.
Putting section 179 on Form 8825
The IRS instructions say section 179 expense deductions are not reported on Form 8825.
Treating self-rental as a simple passive rental issue
Self-rental can trigger owner-level recharacterization rules, so Code 7 properties should be reviewed carefully.
Conclusion
Form 8825 is the core rental real estate reporting schedule for partnerships and S corporations. For the 2026 filing season, the most important updates are the December 2025 revision, the required separation of gross rents from other rental-related income, the updated expense line layout, and the new Schedule A requirement for filers subject to Schedule M-3.
If a partnership or S corporation owns rental real estate, accurate Form 8825 reporting affects Schedule K, Schedule K-1, owner-level passive activity treatment, and the overall accuracy of the tax return.
Frequently Asked Questions
What is Form 8825 used for?
Form 8825 is used by partnerships and S corporations to report rental real estate income, deductible expenses, and depreciation.
Who files Form 8825?
Partnerships filing Form 1065 and S corporations filing Form 1120-S use Form 8825 when they have rental real estate activity.
Do individuals file Form 8825?
No. Individuals generally report rental real estate on Schedule E rather than Form 8825.
What changed on Form 8825 for 2026 filing season?
The December 2025 revision requires separate reporting of gross rents and other rental-related income, updates the expense-line layout, adds new information codes for certain Schedule M-3 filers, and introduces Schedule A (Form 8825) for reporting other deductions by certain filers.
What is Schedule A (Form 8825)?
Schedule A (Form 8825) is the attachment certain Schedule M-3 filers use to report rental real estate other deductions in more detail, with the total carried to Form 8825, line 17.
Is Form 8825 filed separately?
No. Form 8825 is attached to Form 1065 or Form 1120-S.
How does Form 8825 connect to Schedule K-1?
The net rental real estate income or loss from Form 8825 goes to Schedule K, line 2, and each owner’s share is reported on Schedule K-1, box 2.
What is a self-rental on Form 8825?
A self-rental is generally a rental of property to a trade or business activity in which the owner materially participates. The IRS form uses Code 7 to identify self-rental property, while the passive activity result is generally determined at the owner level.
