| “I am a realtor. I have many rentals, which I have filed using sched E for many years. I also have a schedule C for my real estate activities as a realtor. “---->Correct; as long as you are in the business of selling real estate, then you would use Sch C of 1040 to report your business income and expenses. If you are in the business of renting real estate properties you own, then the income and expenses are reported on Sch E of 1040; as long as the amount on SCh C line 29/ 31 is $400 or exceeds $400, then you need to file Sch C and also as long as the amunt on line 4 of Sch SE is $400 or exceeds $400 then you need to pay SE tax. You must make estimated tax payments for the current tax year if You expect to owe at least $1,000 in tax for the current tax year, after subtracting your withholding and credits ORyou expect your withholding and credits to be less than the smaller of: 90% of the tax to be shown on your current year’s tax return, or 100% of the tax shown on your prior year’s tax return on 1040 line 60. (Your prior year tax return must cover all 12 months.)
“Can I combine my sched E rentals into my sched C and thereby reduce my SE tax. “------>I do not think so; Sch C and Sch E are both tax forms used for reporting rental income. They differentiate in the types of rental income included on each form. Sch C is a form used for reporting income subject to self-employment taxes. Any income earned where self-employment taxes must be paid is included on form Sch C. Income not subject to self-employment tax is included on a Sch E form, such as income earned through a business name. You, as REP needs to report your rental income and expenses from rental activity on Sch E of 1040 like any investment property owner. As a REP, as defined by the IRC, you may be deduct expenses OVER the standard limit of $25,000. Sch E is not used to report farm rental income if the rent is paid in the form of a percentage of the crops or livestock produced on the farm. Also, if you provide a large number of services to tenants in a residential property, you may have to treat your activity as being more akin to running a hotel (reported on Sch C) than investing in real estate. The IRS says that providing maid service to tenants can transform your activity into a business, not a Sch E rental. However, providing occasional cleaning or concierge services would probably not be sufficient to change the nature of your activity.If you rent commercial or residential real estate, you must report income and expenses from your rental activities on IRS Sch E and 1040 NOT on Sch C .Examples of rental real estate include apartments or homes for individual residential use or the rental of office suites or buildings for business use.But as long as you lease property other than real estate, you must report your income and expense from the activity on IRS Sch C and Sch SE , 1040.
“I have elected as a "real estate professional" and can deduct all my real estate rental "losses" from my income,”----->Correct; losses from rental real estate activities are usually limited to income from rental activities, including gain on the sale of rental properties. HOWEVER, since you're considered a REP, your losses are(may)not(be) limited to rental income. These losses can offset other types of earned / unearned income such as interest, dividends, salaries, 1099 income, W2 income and pensions. Full-time REPs may be able to deduct 100% of their rental property tax losses from their income. But that's not true for people who spend less than full time as REPs or rental property owners.
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