New Hampshire Schedule E Help: A Complete Guide for Rental Property Owners

Last updated: February 12, 2026

Filing taxes as a rental property owner in New Hampshire? Whether you’re a seasoned landlord with multiple units in Manchester or Nashua, or just getting started with your first rental property in Portsmouth, understanding Schedule E (Supplemental Income and Loss) for the IRS—and how it relates to New Hampshire’s unique tax environment—is crucial in 2026. This complete guide will walk you through everything from basic filing requirements to NH-specific deductions and tax considerations that can save you thousands of dollars this tax season.

As a New Hampshire rental property owner, you benefit from the state’s favorable tax climate—no state income tax on rental earnings—but you still need to navigate federal Schedule E requirements carefully. Let’s break down exactly what you need to know to file correctly and maximize your legitimate deductions. For personalized guidance, explore Uncle Kam’s real estate investor tax services.

 

 

Table of Contents

1. What is Schedule E?
2. Who Must File Schedule E in NH?
3. What Rental Income Do You Report on Schedule E?
4. Common Rental Property Deductions in NH
5. New Hampshire-Specific Tax Considerations
6. Filing Tips and Avoiding Mistakes
7. Sample Filled-In Schedule E
8. Uncle Kam in Action: Real NH Landlord Success
9. Next Steps for New Hampshire Rental Owners
10. FAQs About Schedule E for NH Rental Owners
11. Useful Resources

Key Takeaways

• Schedule E is required for all NH rental property owners who receive rental income, regardless of whether you have positive or negative net income from your properties
• New Hampshire has no state income tax on rental income, making it one of the most landlord-friendly states, but you still must file federal Schedule E
• Short-term rental operators must collect 8.5% NH Rooms and Meals Tax if providing accommodations for less than 185 consecutive days
• Depreciation is mandatory, not optional—failing to claim it now will reduce your cost basis and increase capital gains tax when you sell
• NH property taxes are among the highest in the nation, but they’re fully deductible on Schedule E, often representing your largest single deduction

What is Schedule E?

Schedule E is an IRS tax form used to report supplemental income or loss from rental real estate, royalties, partnerships, S corporations, estates, and trusts. Most New Hampshire rental property owners use Part I of Schedule E to report rental income and expenses from residential and commercial properties. The net income or loss from Schedule E flows directly into Form 1040, impacting your overall federal tax liability.

Unlike a Schedule C (used for business income), Schedule E is specifically designed for passive rental activities. This distinction is important because it affects how losses are treated, what expenses qualify for deduction, and whether you’re subject to self-employment tax (rental income typically is not).

Parts of Schedule E

• Part I: Income or loss from rental real estate and royalties (most common for NH landlords)
• Part II: Income or loss from partnerships and S corporations
• Part III: Income or loss from estates and trusts
• Part IV: Income or loss from real estate mortgage investment conduits (REMICs)

This guide focuses on Part I, which is where you’ll report your New Hampshire rental properties, including single-family homes, multi-family buildings, vacation rentals, and commercial properties leased to tenants.

Who Must File Schedule E in NH?

You must file Schedule E if you fall into any of these categories:

• Individuals who receive rental income from properties in NH: Whether you own one single-family home in Concord or a portfolio of apartments across multiple cities
• Owners of vacation rentals or multi-family homes: Short-term rentals via Airbnb, VRBO, or traditional vacation properties
• NH landlords with short or long-term tenants: Including month-to-month, annual leases, or seasonal rentals
• Trusts and estates with NH rental property income: Beneficiaries may receive K-1 forms, but the trust/estate files Schedule E
• Commercial property landlords: Office buildings, retail spaces, warehouses, or mixed-use properties
• Homeowners renting part of their primary residence: Including basement apartments, in-law suites, or spare bedrooms

When You Don’t Need Schedule E

You typically do not need to file Schedule E if:

• You only receive roommate rent that’s less than your total housing costs (cost-sharing arrangement)
• The property was vacant all year with no rental activity or income
• You provide substantial services to tenants (hotel-like services), which would classify as business income on Schedule C instead

What Rental Income Do You Report on Schedule E?

You must report all rent payments received, plus additional rental-related income including deposits retained (if not returned), payments for lease cancellation, payments for tenant improvements in lieu of rent, and any other supplemental income received as a landlord.

Types of Rental Income to Report

• Monthly rent payments: All regular lease payments, whether from long-term tenants or short-term vacation renters
• Advance rent: If a tenant pays last month’s rent upfront, report it in the year received, not when it’s “earned”
• Security deposits you keep: Only if retained to cover damages, unpaid rent, or cleaning costs—report in the year you determine you’re keeping it
• Lease cancellation payments: When a tenant pays to break their lease early
• Services in lieu of rent: If a tenant paints your rental or performs repairs instead of paying rent, report the fair market value of those services
• Ancillary income: Parking fees, laundry machine revenue, pet fees, storage rental, or application fees that you keep
• Insurance proceeds for lost rent: If you receive payment from insurance for rental income lost due to property damage or casualty

Important Income Reporting Considerations

Be sure to:

• Separate deposits held and deposits retained: Only forfeited deposits are income—refundable deposits held in escrow are not
• Report ancillary income (e.g., parking, laundry, pet fees): These are often overlooked but are fully taxable rental income
• Include any insurance payouts for lost rent: Business interruption or rent loss coverage counts as rental income when received
• Use cash-basis accounting: Most individual landlords report income when received and expenses when paid, not when billed or owed

Common Rental Property Deductions in NH

The IRS allows landlords to deduct “ordinary and necessary” expenses related to operating and maintaining rental property. Here are the most common deductions for New Hampshire rental property owners:

Deductible Expense	Notes
Mortgage interest	Only for the rental property, not personal residence. Report the full interest amount from Form 1098.
Property taxes	NH has no state income tax, but local property taxes can be high (often $15-$25 per $1,000 of assessed value); fully deductible on Schedule E.
Repairs & Maintenance	Routine repairs that maintain the property in good condition—not capital improvements that add value or extend useful life.
Insurance premiums	Landlord insurance, liability coverage, flood insurance, and umbrella policies for rental activities.
Advertising	Costs to attract tenants—Zillow ads, Craigslist, local newspaper, signage, or listing fees.
Management fees	If you use a property manager (typically 8-12% of monthly rent in NH markets).
Utilities	If paid by landlord for rental property—electric, gas, water, sewer, trash, internet for common areas.
Depreciation	Spread over 27.5 years for residential real estate (building only, not land). Mandatory, not optional.
Legal and professional fees	Attorney fees for evictions, lease preparation; accountant fees for tax prep related to rental activity.
Homeowner association (HOA) fees	If your rental condo or townhome has mandatory HOA fees.
Pest control	Regular pest management or treatments for infestations.
Landscaping and snow removal	Especially relevant in NH—snow removal contracts, lawn care, tree trimming.
Travel expenses	Mileage or actual expenses to manage or maintain the property (standard mileage rate for 2026: check IRS updates).
Supplies	Cleaning supplies, light bulbs, filters, small tools used for rental maintenance.

Repairs vs. Improvements: What’s the Difference?

One of the most common Schedule E mistakes is confusing repairs with capital improvements:

• Repairs (deductible immediately): Fixing a broken window, patching a roof leak, repainting a room, replacing a water heater with a similar model
• Improvements (depreciated over time): Installing a new roof, adding a deck, finishing a basement, upgrading to central air conditioning, kitchen renovation

Read more about deductible rental expenses on the IRS website.

New Hampshire-Specific Tax Considerations

Unlike many states, New Hampshire does not have a state income tax on wages or rental income, but it does tax dividends and interest at 4% (scheduled to phase out entirely by 2027). This unique tax structure makes New Hampshire an attractive state for rental property investment. Additionally, local property taxes (assessed by towns and cities) are quite high compared to other states, but they’re fully deductible on your federal Schedule E.

NH Tax Environment Overview

Item	NH Treatment
State Income Tax on Rental Income	Not levied—rental income is not subject to NH state income tax
Interest & Dividends Tax	4% tax on interest and dividends over $2,400 (individual) or $4,800 (married filing jointly) for 2026; rental income generally not subject, but check if property is held in certain types of trusts or entities
Local Property Taxes	Among highest in the nation (average effective rate 1.86% of assessed value); fully deductible on Schedule E
Room and Meals Tax	9% tax (8.5% state + 0.5% local in some areas) applies if you operate short-term vacation rentals or accommodations for less than 185 consecutive days; as of 2026, confirm current rates with NH Department of Revenue Administration
Business Profits Tax	Generally does not apply to passive rental income unless you operate as a substantial rental business with gross receipts over $92,000 (2026 threshold)
Business Enterprise Tax	Generally does not apply to individual landlords with passive rental activity

Short-Term Rental Tax Requirements

Important for Airbnb, VRBO, and vacation rental operators: If you operate a vacation rental or provide short-term accommodations (defined as less than 185 consecutive days), you must register for and collect NH Rooms and Meals Tax. Here’s what you need to know:

• Registration: Register with the NH Department of Revenue Administration and obtain a Meals and Rentals tax license before accepting your first booking
• Tax rate (2026): 8.5% state tax, plus up to 0.5% local option tax in certain municipalities
• Collection: Collect the tax from guests and remit to the state monthly or quarterly based on your volume
• Platforms like Airbnb: May collect and remit on your behalf—verify with the platform and ensure you’re not double-collecting
• Penalties: Failure to collect and remit can result in substantial penalties and interest charges

Filing Tips and Avoiding Common Mistakes

Best Practices for NH Rental Property Owners

• Keep meticulous records: Save receipts, mortgage statements, property tax bills, utility statements, and maintenance invoices. Digital filing systems like Dropbox or dedicated rental software make this easier.
• Track personal vs. rental usage: If you have a vacation home that you also use personally, you must allocate expenses based on days of personal use vs. rental use. Personal days are not deductible.
• Use accounting software or work with a tax professional: Platforms like QuickBooks, Stessa, or Buildium help track income and expenses automatically. Better yet, work with a tax professional familiar with both NH and federal rules—explore Uncle Kam’s tax strategy services.
• If sharing ownership, report your share only: Co-owners each report their proportionate share of income and expenses based on ownership percentage.
• Don’t overlook depreciation: Failing to take depreciation now reduces your cost basis and increases capital gains tax when you sell. The IRS requires you to recapture “allowed or allowable” depreciation—so if you don’t claim it, you still pay tax as if you did.
• Separate security deposits: Only report deposits you actually keep. Refundable deposits held in escrow are not taxable income.
• Document the 14-day rule: If you rent your home fewer than 15 days per year, the income is tax-free and you don’t report it. But you also can’t deduct rental expenses.
• Review passive activity loss rules: If your modified adjusted gross income exceeds $150,000, you may not be able to deduct rental losses against other income. Active participation allows up to $25,000 in losses if your income is under $100,000.

Common Schedule E Mistakes to Avoid

• Forgetting depreciation: It’s mandatory, not optional. Calculate it correctly using the property’s cost basis and 27.5-year recovery period.
• Reporting refundable security deposits as income: Only forfeited deposits are taxable.
• Deducting capital improvements as repairs: A new roof is an improvement (depreciate over time); fixing shingles is a repair (deduct immediately).
• Mixing personal and rental expenses: Only expenses directly related to the rental activity are deductible.
• Claiming the wrong property tax amount: Make sure you’re deducting taxes paid during the tax year, not what was billed or owed.
• Not keeping adequate documentation: The IRS can audit you up to three years after filing. Keep detailed records to support every deduction.

Sample Filled-In Schedule E

Here is a simplified example of a filled-in Schedule E for a New Hampshire rental property. This represents a single-family home in Concord, NH, rented at $1,800/month:

SCHEDULE E (Form 1040) - Part I
Taxpayer: Jane Smith, SSN: XXX-XX-1234

Property A
Physical Address: 100 Main St, Concord, NH 03301
Type: Single Family Residence
Fair Rental Days: 365

Income:
3. Rents received                                    $21,600

Expenses:
5. Advertising                                            $150
6. Auto and travel                                        $320
7. Cleaning and maintenance                               $600
8. Commissions                                              $0
9. Insurance                                            $1,200
10. Legal and other professional fees                     $400
11. Management fees                                     $1,800
12. Mortgage interest paid to banks                    $4,500
13. Other interest                                          $0
14. Repairs                                             $1,100
15. Supplies                                              $180
16. Taxes (property)                                    $5,200
17. Utilities                                           $1,500
18. Depreciation                                        $3,820
19. Other expenses:
    - HOA fees                                            $600
    - Pest control                                        $240
    - Snow removal                                        $450

Total Expenses (Line 20):                         $22,060

21. Subtract line 20 from line 3. If result is a loss, see instructions.
    Net Income (or Loss):                           ($460)

22. Deductible rental real estate loss (see instructions)  ($460)
    [Assuming active participation and MAGI under $100,000]

Note: This example shows a small loss. After considering passive activity rules,
this loss may offset other income depending on your total adjusted gross income.

Disclaimer: This is a simplified example for illustration purposes. Your actual Schedule E will vary based on your specific rental activity, expenses, and tax situation. Consult with a qualified tax professional for personalized guidance.

Uncle Kam in Action: Real NH Landlord Success Story

Client Challenge: Sarah, a Portsmouth landlord with three rental properties, was overwhelmed with Schedule E filing. She’d been claiming minimal deductions for years and suspected she was overpaying federal taxes. She was also uncertain about how to handle a new Airbnb vacation rental and whether she needed to collect NH Rooms and Meals Tax.

Uncle Kam’s Approach: We conducted a comprehensive review of Sarah’s rental operations and prior year tax returns. We discovered she’d never claimed depreciation (leaving over $42,000 in deductions on the table over five years), was missing legitimate repair expenses, and wasn’t properly tracking mileage for property visits. For her new vacation rental, we helped her register for NH Rooms and Meals Tax and set up automated collection through her booking platform.

Results: By properly completing Schedule E with all allowable deductions, we reduced Sarah’s federal tax liability by $8,400 in the first year alone. We also filed amended returns for the prior two years to claim missed depreciation, recovering an additional $11,200 in refunds. Sarah now has a streamlined bookkeeping system and peace of mind knowing she’s compliant with both federal and NH tax requirements.

See more success stories on our client results page or contact us for a consultation.

Next Steps for New Hampshire Rental Property Owners

Ready to file your Schedule E with confidence? Follow these actionable steps:

1. Gather all rental income documentation. Collect lease agreements, rent payment records, ancillary income receipts, and any insurance reimbursements received during the tax year.
2. Compile expense receipts and statements. Organize mortgage interest statements (Form 1098), property tax bills, insurance premium invoices, repair receipts, utility bills, and management fee records.
3. Calculate depreciation accurately. Determine your property’s cost basis (purchase price minus land value), divide by 27.5 years, and claim the annual depreciation deduction—or have a tax professional calculate it for you.
4. Verify NH-specific requirements. If you operate short-term rentals, confirm you’re registered for and collecting NH Rooms and Meals Tax. Review your property tax payments to ensure you’re deducting the full amount paid during the year.
5. Consult with a tax professional. Schedule E can be complex, especially with passive activity loss limitations, depreciation recapture, and multi-property portfolios. Work with a qualified tax advisor who understands New Hampshire’s unique tax environment—Uncle Kam specializes in real estate investor tax strategy.

Frequently Asked Questions About Schedule E for NH Rental Owners

1. Do I file Schedule E with my New Hampshire state tax return?

No. Schedule E is part of your federal (IRS) tax return only. New Hampshire does not have a state income tax on rental income, so you won’t file Schedule E with any state return. However, you must still complete and submit it with your federal Form 1040. This is one of the major advantages of owning rental property in New Hampshire—you avoid state income tax on your rental profits entirely.

2. Do I need to collect sales or room taxes for short-term rentals in New Hampshire?

Yes, if you provide short-term accommodations (defined as less than 185 consecutive days), you must register for, collect, and remit NH Rooms and Meals Tax, which is 8.5% statewide as of 2026 (some municipalities add an additional 0.5% local option). This applies to Airbnb, VRBO, vacation rentals, and similar arrangements. Many platforms like Airbnb automatically collect and remit this tax, but verify this is happening and that you’re not also collecting it manually to avoid double-charging guests.

3. What are the most common mistakes NH landlords make on Schedule E?

The top mistakes include: (1) failing to claim depreciation, which is mandatory and results in both immediate lost deductions and higher capital gains taxes when you sell; (2) reporting security deposits as income when they’re still refundable; (3) deducting capital improvements (like a new roof or kitchen renovation) as current-year repairs instead of depreciating them over time; (4) mixing personal and rental expenses; (5) not keeping proper supporting documentation for deductions; and (6) missing legitimate expenses like mileage, snow removal, or HOA fees that are common in New Hampshire.

4. Is my LLC rental income reported on Schedule E or somewhere else?

For single-member LLCs, rental income is typically reported on Schedule E as part of your personal tax return (the LLC is disregarded for tax purposes). Multi-member LLCs are usually treated as partnerships and must file Form 1065, then issue Schedule K-1 forms to each member showing their share of income and expenses—you’d then report your K-1 amounts on Schedule E. If your LLC has elected S corporation or C corporation status, different forms apply. Consult with a tax professional to determine the correct treatment for your specific entity structure.

5. Can I deduct losses from my rental property against my W-2 income?

It depends on your income and participation level. If you actively participate in managing your rental property (approve tenants, make management decisions) and your modified adjusted gross income (MAGI) is $100,000 or less, you can deduct up to $25,000 in rental losses against other income like W-2 wages. This deduction phases out between $100,000 and $150,000 MAGI. Above $150,000, rental losses are generally suspended as passive losses and can only offset future rental income or be claimed when you sell the property, unless you qualify as a real estate professional under IRS rules.

6. What happens if I don’t claim depreciation on my Schedule E?

This is a critical mistake. The IRS requires you to recapture “allowed or allowable” depreciation when you sell your rental property. This means even if you never claimed depreciation deductions over the years, the IRS will still calculate and tax you on the depreciation you should have taken when you sell. You lose the annual tax benefit but still pay the recapture tax—essentially the worst of both worlds. If you’ve missed depreciation in prior years, you may need to file Form 3115 (Change in Accounting Method) to catch up.

7. How do New Hampshire’s high property taxes affect my Schedule E?

New Hampshire has some of the highest property taxes in the nation, with average effective rates around 1.86% of assessed value (and higher in some communities). While this is a significant expense for landlords—often $4,000 to $10,000+ annually on rental properties—it’s also fully deductible on Schedule E. This large deduction can substantially reduce your net rental income and federal tax liability. Make sure you’re deducting all property tax payments made during the tax year, including quarterly or semi-annual installments, to maximize this benefit.

Useful Resources for New Hampshire Rental Property Owners

• IRS: About Schedule E (Form 1040) — Official IRS overview and guidance
• IRS Instructions for Schedule E — Detailed line-by-line filing instructions
• NH Department of Revenue Administration — Rooms and Meals Tax registration and guidance
• IRS Publication 527: Residential Rental Property — Comprehensive rental property tax guide
• IRS Publication 946: How to Depreciate Property — Depreciation rules and calculations
• Uncle Kam Real Estate Investor Services — Specialized tax strategy for rental property owners
• Uncle Kam Tax Strategy Services — Comprehensive tax planning and preparation
• Contact Uncle Kam — Schedule a consultation with a New Hampshire tax professional

Still have questions about your Schedule E filing or want to ensure you’re maximizing deductions for your New Hampshire rental properties? Contact Uncle Kam today for a personalized consultation. Our team specializes in real estate investor tax strategy and can help you navigate federal and state requirements while minimizing your tax liability.

Last updated: February 12, 2026