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. Real Estate Investment Group

    An organization that builds or buys a group of properties and ...
  4. Alligator Property

    In real estate, when the cost of mortgage payments, property ...
  5. Rent Expense

    The cost incurred by a business to utilize property. Business ...
  6. Modified Accelerated Cost Recovery ...

    The new accelerated cost recovery system, created after the release ...
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

    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.
  4. 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.
  5. Personal Finance

    Vacation Property Walkthrough: Renting Out A Vacation Home

    People who rent out a vacation home may do so to offset the expenses of ownership or to generate income (ideally a profit). There are several important considerations when deciding to rent out ...
  6. 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.
  7. Personal Finance

    4 Ways To Value A Real Estate Rental Property

    Learning these concepts is the first step in getting into the real estate investment game.
  8. Personal Finance

    4 Ways To Value A Real Estate Rental Property

    Real estate rentals can be a profitable alternative to the buy-and-sell approach if investors know how to make accurate valuations.
  9. Retirement

    The Income Property: Your Late-In-Life Retirement Plan

    You're nearing retirement age and you don't have the nest egg you need. Here's how an income property can help you make up the shortfall.
  10. Personal Finance

    How Does Depreciation Reduce My Tax Bill?

    How the depreciation tax rule can assist real estate investors.
RELATED FAQS
  1. An appraiser forms the following estimates for a rental property ...

    Free info on financial certification exams including study guides, exam questions, and much more! 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. 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 >>
  4. 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 >>
  5. When I retire, will collecting rent from property I own cause me to be penalized ...

    The rent amounts to $6500/month. ... Read Answer >>
  6. Can real estate be depreciated?

    Decrease the amount of taxable income on your income-producing real estate by depreciating the asset on your federal income ... Read Answer >>
Hot Definitions
  1. Sell-Off

    The rapid selling of securities, such as stocks, bonds and commodities. The increase in supply leads to a decline in the ...
  2. Brazil, Russia, India And China - BRIC

    An acronym for the economies of Brazil, Russia, India and China combined. It has been speculated that by 2050 these four ...
  3. Brexit

    The Brexit, an abbreviation of "British exit" that mirrors the term Grexit, refers to the possibility of Britain's withdrawal ...
  4. Underweight

    1. A situation where a portfolio does not hold a sufficient amount of a particular security when compared to the security's ...
  5. Russell 3000 Index

    A market capitalization weighted equity index maintained by the Russell Investment Group that seeks to be a benchmark of ...
  6. Enterprise Value (EV)

    A measure of a company's value, often used as an alternative to straightforward market capitalization. Enterprise value is ...
Trading Center