What we handle
- Schedule E for long-term residential and commercial rentals
- Depreciation schedules, including catch-up where prior years understated it
- Cost segregation coordination for larger properties
- Passive activity loss limits and suspended loss tracking
- Short-term rental income, where Schedule C treatment may apply instead
- 1031 exchange reporting and basis carryover
- Sale of a rental, including depreciation recapture
Depreciation is not optional
This is the single most expensive misunderstanding in rental property tax. Depreciation is not a deduction you may choose to skip — on sale, the IRS recaptures depreciation allowed or allowable. Skip it for ten years and you still pay recapture on ten years of it. If prior returns missed depreciation, there is a procedure to correct it, and it is usually worth doing.
The Portland-area layer
- Portland requires residential rental registration, and there is a schedule filed with the city business tax return
- Rental income counts toward the Portland Business License Tax and Multnomah County Business Income Tax thresholds
- Metro SHS applies to rental income within the district on the same threshold basis as other income
- Clark County landlords with Oregon property have an Oregon non-resident filing obligation — see multi-state returns
My rental lost money. Do I still need to file it?
Yes. And the loss may be suspended rather than deductible this year depending on your income and participation level — tracking it correctly is what makes it usable later.
I inherited a rental. What is my basis?
Generally the fair market value at date of death, which usually resets depreciation. Get a valuation contemporaneously; reconstructing it years later is much harder.
Do I qualify as a real estate professional?
The test is demanding — more than half your working time and over 750 hours in real property trades, with material participation. Where it is met, it changes the passive loss position substantially.
What about selling?
Plan it before you sign anything. Depreciation recapture, capital gain, Oregon tax, potential Metro SHS exposure and a possible 1031 exchange all interact, and the options narrow sharply once a sale closes.
Talk it through before filing season starts
Start with a complimentary 15-minute introductory call about your situation and whether we are a good fit. No tax advice is given on that call.
Written by
Enrolled Agent, Oregon Licensed Tax Consultant
License number: Enrolled Agent 00160070-EA · Oregon Licensed Tax Consultant 35746-C
Heather has spent more than a decade preparing individual and business returns across the Portland metro and the Columbia Gorge, and holds unlimited rights to represent taxpayers before the IRS.
Last reviewed
This page is general information about Oregon, Washington and federal tax rules, not advice about your own return. Thresholds and rates change every year. Figures were verified as of August 2026 — check the linked official sources, or talk to us about your situation.