What this line means
The combined total of all rental real estate and royalty income or loss from Part I. This is the bottom line of Part I — the net result of all your rental properties and royalty income after expenses and passive activity loss limitations. If Parts II through V do not apply to you, this amount goes directly to Schedule 1, line 5 and flows to Form 1040.
Does this apply to you?
- You completed Part I of Schedule E with one or more rental properties or royalty sources
- You need to carry the rental and royalty result to your Form 1040
- You also have income from Parts II through V and need to combine all supplemental income on line 40
Easy to overlook
This line combines income and limited losses — not raw losses Line 26 includes the income amounts from profitable properties and the deductible loss amounts after passive activity limitation. If you have a $20,000 profit from one property and a $30,000 loss from another but only $25,000 of the loss is deductible, line 26 shows negative $5,000, not negative $10,000. The $5,000 suspended loss carries forward on Form 8582. 1 IRS Schedule E instructions — Line 26
Additional Schedule E pages must be included If you filed additional Schedule E pages for properties 4, 5, 6, and beyond, only the first page carries line 26 forward. Amounts from additional pages must be combined on the first page. Missing a supplemental page means those properties are excluded from your total, understating either income or losses. 2 General filing pattern — Part I total not carried to Schedule 1
Watch out for this
Entering the line 26 amount on Schedule 1, line 5 when you also have income from Parts II through V. If you have partnership income, estate or trust income, or other supplemental income, line 26 is not your final Schedule E number. The final total is on line 40, which combines all five parts. Only line 40 goes to Schedule 1.
Footnotes
-
IRS Schedule E (Form 1040) Instructions, Line 26. https://www.irs.gov/instructions/i1040se ↩
-
IRS Schedule E (Form 1040) Instructions, Additional Schedules. https://www.irs.gov/instructions/i1040se ↩