Residential Rental Property

DEFINITION of 'Residential Rental Property'

A type of property that derives more than 80% of its revenue from dwelling units. Residential rental property uses the 27.5 year modified accelerated cost recovery system (MACRS) schedule for depreciation.

Income from residential rental property is passive income.

BREAKING DOWN 'Residential Rental Property'

Only residential rental property that has been placed in service after 1986 is eligible for MACRS treatment. A dwelling unit is defined as either a house or apartment. Hotel and motel units do not qualify as residential rental property under the Internal Revenue Service's (IRS) definition of residential rental property.

RELATED TERMS
  1. IRS Publication 527 - Residential ...

    A document published by the Internal Revenue Service (IRS) that ...
  2. Income Property Mortgage

    A loan given to an investor to purchase a residential or commercial ...
  3. Form 4797

    A tax form distributed by the Internal Revenue Service (IRS) ...
  4. Property Management

    The administration of residential, commercial and/or industrial ...
  5. Earning Assets

    An income-producing investment that is owned by a business, institution ...
  6. Unit of Production Method

    A depreciation procedure used for property that is not in continuous ...
Related Articles
  1. Managing Wealth

    How Rental Property Depreciation Works

    It's a bit tricky, but a valuable tool to make your investment pay off.
  2. Personal Finance

    3 Reasons to Invest in Multi-family Real Estate

    Here are three reasons to consider investing in multi-family real estate as opposed to single unit rental properties.
  3. Personal Finance

    Getting U.S. Tax Deductions On Foreign Real Estate

    If your home or second home is not in the United States, you can still get U.S. tax deductions. How many and what kind depends on whether you also rent it.
  4. Retirement

    Generate Income For Retirement with Real Estate

    Learn whether rental income is compatible with your lifestyle, how to identify suitable properties, common pitfalls to avoid and how to secure financing.
  5. Personal Finance

    How To Prevent A Tax Hit When Selling A Rental Property

    Rental property ownership has its benefits but when selling you can face a big tax hit. Thankfully there are ways to reduce your capital gains exposure.
  6. Managing Wealth

    The Pros And Cons Of Owning Rental Property

    Owning rental property can be a rewarding and profitable experience, but it comes with some real risks.
  7. Investing

    Tips For The Prospective Landlord

    Investing in rental property can generate serious income, but there's more to it than collecting rent.
  8. Personal Finance

    Is It Worth Buying A Second Home To Rent?

    Mortgage interest rates are low, but consider these dos and don'ts before making the leap into rental property ownership.
  9. Personal Finance

    4 Ways To Value A Real Estate Rental Property

    Learn to evaluate real estate and get into the investment game.
  10. Personal Finance

    Tax Rules For Renting Out Your Vacation Home

    Here's a rundown of the specific tax rules that apply to homeowners renting out a vacation property.
RELATED FAQS
  1. Can I take a loss on real estate owned and sold as “other investment”?

    I owned a house which we used as our primary place of residence from 2006 - 2009.  Read Answer >>
  2. Can I claim depreciation of a rental property I co-own with my brother, after he ...

    I am a co-owner of a rental property with my brother. For the first 27.5 years he made all payments, reported the rental ... Read Answer >>
  3. Do I have to pay capital gains tax on commercial property?

    I am retired and living on a fixed income. When selling a piece of commercial property, do I have to report and pay capital ... Read Answer >>
  4. How much of the global economy is comprised of the real estate sector?

    Find out how much of the global economy consists of the real estate sector, including output from commercial and residential ... Read Answer >>
  5. How is Net Operating Income (NOI) used in real estate?

    Find out more about net operating income, what it measures and how it is used to analyze a real estate property's return. Read Answer >>
  6. When I retire, will collecting rent from property I own cause me to be penalized ...

    The rent amounts to $6500/month. ... Read Answer >>
Hot Definitions
  1. Cyclical Stock

    An equity security whose price is affected by ups and downs in the overall economy. Cyclical stocks typically relate to companies ...
  2. Front Running

    The unethical practice of a broker trading an equity based on information from the analyst department before his or her clients ...
  3. After-Hours Trading - AHT

    Trading after regular trading hours on the major exchanges. The increasing popularity of electronic communication networks ...
  4. Omnibus Account

    An account between two futures merchants (brokers). It involves the transaction of individual accounts which are combined ...
  5. Weighted Average Life - WAL

    The average number of years for which each dollar of unpaid principal on a loan or mortgage remains outstanding. Once calculated, ...
  6. Real Rate Of Return

    The annual percentage return realized on an investment, which is adjusted for changes in prices due to inflation or other ...
Trading Center