PA-40 Schedule E: 2025 PA Schedule E - Rents and Royalty Income (Loss) (PA-40 E) (2025)
Pennsylvania · Pennsylvania DOR · Used for tax years 2025
Pennsylvania PA-40 Schedule E reports rental and royalty income, related expenses, and net income or loss for individuals, estates, and trusts. It also covers income or loss from patents and copyrights and is included with a PA-40 or PA-41 return.
Who files this form
Complete 2025 PA-40 Schedule E if you, your spouse, or an estate or trust have net income or loss from:
- Rental property.
- Royalties, including oil and gas wells, book sales, or other sources.
- Patents or copyrights.
Include the schedule with the original PA-40 or PA-41 return, even if you are reporting only a loss.
Use PA Schedule C instead if you are in the business of renting property, extracting minerals from your property, or producing products from your patents and copyrights. Taxpayers in the real estate sales business also use Schedule C for rentals of real estate held for sale to customers in the ordinary course of business.
What you'll need
Have these records and details available:
- The taxpayer’s name and Social Security number, or the estate or trust’s name and FEIN. For a joint return, use the primary taxpayer’s name and SSN, even when reporting the spouse’s income.
- Each property’s type, description, complete address, ownership, and whether it is rented for profit.
- Rental-period details, including whether any rental period is less than 30 days.
- Gross rent and royalty amounts, plus expense details for each property. Records must show how debt proceeds were used to determine interest attributable to rental activities.
- Federal Forms 1099-MISC for oil and gas royalties. Report each paying producer separately for each form received.
- PA Schedules RK-1 or NRK-1 for rent or royalty income from PA S corporations or partnerships. If those schedules are not provided, use federal Schedule K-1. Include a statement showing each entity’s name, FEIN, and income or loss.
- The applicable sales tax license number for short-term rentals, including the broker’s number if the broker collects and remits hotel occupancy tax.
How to file
Include Schedule E with your PA-40 Personal Income Tax Return or PA-41 Fiduciary Income Tax Return. Submit additional schedules if you have more than three properties.
Transfer the totals as directed:
- Line 22: Include this amount with the other specified business and farm income or loss amounts on PA-40, Line 4, or PA-41, Line 3.
- Line 25: Add Lines 23 and 24 and report the total on PA-40, Line 6, or PA-41, Line 5. If using multiple schedules, total all Line 23 and Line 24 amounts.
If you discover changes to income or expenses after filing, include an amended Schedule E with Schedule PA-40 X or PA-41 X. Explain the changes in Section III on page 2 of that amendment schedule.
The supplied text does not give a mailing address or e-filing directions for Schedule E.
Common mistakes
- Using federal Schedule E instead. The instructions warn that Pennsylvania generally does not follow federal rules for this income.
- Deducting all expenses when only part of a property is rented. Deduct only the expenses or percentages that apply to the rented portion.
- Combining different rental-period lengths. If the same property has rental periods of less than 30 days and periods of 30 days or more, list it as two separate properties and separate the income and expenses.
- Using one spouse’s loss to reduce the other spouse’s income. Calculate each spouse’s net income or loss separately. Split joint income and losses equally for these calculations.
- Claiming a loss for a property not rented for profit. Pennsylvania does not permit such losses.
- Leaving out an out-of-state or foreign property’s address. The complete address is required.
Questions people ask
Do I need Schedule E if I only have a loss?
Yes. Schedule E must be completed even if the only transaction is reporting a loss.
What if I have more than three properties?
Submit additional schedules as needed.
How should I round dollar amounts?
Use whole dollars. Drop amounts under $0.50 and round amounts of $0.50 or more up to the next dollar.
How do I report oil and gas royalties from a property that also earns rent?
Report the royalties separately from rental income for the same property. Use the gross royalty income shown on federal Form 1099-MISC. Expenses deducted by the lessee before payment may be recorded and deducted on Schedule E, subject to the stated expense rules.
What if renters pay through a third-party broker?
Fill in the “Yes” oval for the third-party broker question if renters pay a home-sharing website or broker rather than paying you directly. If the broker collects and remits hotel occupancy tax, include the broker’s sales tax license number.