IRS Form 8825 (Rental Real Estate Income and Expenses of a Partnership or an S Corporation)

Need some advice on the right way to complete your partnership’s IRS tax form 8825? In this article, we take a closer look at what to do and why it’s important. Whether you’re managing a small partnership or an S-corp, if you want to keep your records kosher and qualify for tax breaks, you’ve got to fill out and submit form 8825 correctly.

What Is Form 8825?

IRS Form 8825 (or IRS Tax Form 8825) is a tax document used by partnerships and S-corporations to report income and expenses from owned real estate. Up to eight different properties may be included on a single submission and the organization must provide information about each property’s expenses and incomes to be eligible for tax deductions.

This tax document is also known as the Rental Real Estate Income and Expenses of a Partnership or S-Corporation form.

Tax Form 8825 calculates the amount of tax owed to the IRS on any declared properties. Understanding how to complete this document correctly will save your organization time and money.

Who Should Use Form 8825?

Form 8825 is used by partnerships and S-corps in the United States to report incomes and deductible expenses from real estate activities. This includes rental real estate activities that flow through estates, partnerships and/or trusts reported on a K1. For instance, if your partnership owns an apartment complex and rents units in the property to individuals or business entities, it needs to complete this document.

If your partnership wishes to declare more than eight properties, it may need to fill out an additional 8825 form. Please read the terms in the Passive Activity Limitations and Extraordinary Income Exclusions before doing so.

IRS Tax Form 8825 is usually attached to Form 1065, Form 1065-B (return of partnership income) or IRS Tax Form 1120S (corporation income tax return) depending on the size and nature of the declaring organization.

Essential Elements of Form 8825

At a minimum, your IRS Tax Form 8825 must contain the following information (for each declared property):

  • Name of the taxpaying entity/organization
  • Employer identification number
  • Property’s address
  • Property’s status (single-family, multi-family, commercial, etc)
  • Property’s rental real estate income (gross rents)
  • Property’s expenses (travel, insurance, taxes, maintenance, salaries, etc)

How to Fill Out a Form 8825 (Step By Step)

Here is a quick breakdown of what Tax Form 8825 includes and in what order you should complete the sections:

Name

Employer Identification Number

List of Properties Being Declared (inc. type and address of every property)

  • Actual physical address
  • Type (single-family residence, multi-family residence, short term rental, commercial, land, royalties, self-rental or other)
  • Number of days used for rental activities
  • Number of days of personal use

Rental Real Estate Incomes

Rental Real Estate Expenses

Total (all) Gross Rents

Total (all) Expenses

Net Profit from Deposition of Property from Real Estate Activities

Net Incomes and/or Losses from Real Estate Activities from Partnerships, Estates and Trusts (consult Schedule K-1 for guidance on beneficiaries)

Any Partnerships, Estates or Trusts from which Net Income/Loss Is Declared

What You Don’t Have to Report

Here are some details you do NOT need to include on your IRS Tax Form 8825 for it to be validated:

  • Any incomes and/or expenses relating to non-real estate activities
  • Portfolio deductions or income
  • Section 179 deductions
  • Declarations separately disclosed to shareholders and/or partners

FAQs: Form 8825

This section answers common questions about Form 8825 and its importance for a partnership’s tax filings:

What is a tax form 8825?

Tax form 8825 is a tax document used by partnerships and S-corporations to declare incomes and expenses from real estate activities. Up to eight different properties may be included on a single 8825 form and information about each property’s expenses and incomes must be provided.
IRS Tax Form 8825 calculates the amount of tax owed on declared properties and any tax breaks or incentives owed to the partnership.

What is the purpose of Form 8825?

Form 8825 is for reporting the rental incomes and expenses of taxpaying S-corps and partnerships. IRS uses this document to calculate the amount of tax a partnership must pay throughout the fiscal year.

Is Form 8825 the same as Schedule E?

IRS Tax Form 8825 and Schedule E (or Tax Form 1040) are very similar documents. However, Schedule E is used by individual owners to declare real estate incomes and/or expenses and not by partnerships. If you are declaring on behalf of an S-corp or partnership, you must use Form 8825.

What are the documents that must accompany Form 8825?

IRS Tax Form 8825 is usually accompanied by Form 1065, Form 1065-B (return of partnership income) or IRS Tax Form 1120S (corporation income tax return) depending on the size and nature of your partnership.

What is Form 8825 due?

Tax Form 8825 must be filed at the partnership’s closest IRS building at the same time the partnership or S-corp submits form 1065 or 1120S (as appropriate). It takes two hours to complete the document provided all the necessary information is to hand.

Final Thoughts

The best way to ensure your partnership or S-corporation benefits from all possible tax incentives is to file documents with the IRS promptly and correctly. The sooner the IRS understands how much you earn from your real estate portfolio, the quicker and more accurately it can calculate your tax breaks and responsibilities.

So don’t put off completing your Tax Form 8825. It only takes a couple of hours and it’s an important part of not just making sure your partnership pays the right amount but also that it gets the right amount back.