A CPA for landlords and rental property owners in Portland

Why Portland landlords need a CPA for landlords who knows the city

A single condo in the Pearl, a duplex in Montavilla, a few units off Division. Small Portland landlords often treat rentals as a side project, then find that the city treats them as a business. That one fact drives a lot of the paperwork.

The City of Portland says renting residential property is a business activity, so owners need a Revenue Division tax account. Every year you also register your units on Schedule R, which is attached to the combined City of Portland and Multnomah County business tax return. On the federal side, the income and expenses usually go on Schedule E.

A CPA who works with Portland landlords puts all of those filings together so the numbers match, from your federal return down to the unit list the city keeps on file.

Many owners arrive with one specific worry: a city letter about Schedule R, a depreciation schedule nobody has updated in years, or a sale coming up. That is a fine place to start. The CPA can fix the immediate problem and then look at the rest of your rental setup.

Schedule E and what counts as rental income

The IRS says most real estate rental income and expenses go on Schedule E. Rentals where you provide substantial services to tenants, more like a hotel than a lease, go on Schedule C instead, which brings self employment tax into the picture. Short term rentals with cleaning and guest services sometimes land on that line, so it is worth checking.

Rent is not the only income. Advance rent, a payment a tenant makes to cancel a lease, expenses a tenant pays for you and any part of a security deposit you keep because of damage or a broken lease generally count as income too. A deposit you may have to give back is not income when you receive it.

On the expense side, mortgage interest, property tax, insurance, repairs, property management fees and utilities you pay are common deductions. Keeping each property's records separate makes Schedule E much easier and makes your numbers easier to defend if the IRS ever asks.

Owners who live in one unit of a duplex or rent out part of their own home have extra steps, because expenses need to be split between the rental part and the personal part. Your CPA can work out a fair split, usually by square footage or number of rooms, and keep it consistent from year to year.

Depreciation, repairs and improvements

Depreciation lets you deduct the cost of the building over time. The IRS recovery period for residential rental property is 27.5 years. You start when the property is placed in service, meaning ready and available to rent, and you report it on Form 4562.

Land cannot be depreciated. That is why splitting your purchase price between land and building has a real effect on your deduction every year.

The line between a repair and an improvement trips up many landlords. A repair that keeps the unit in normal working order can usually be deducted in the year you pay it. A new roof, an added bathroom or work that adapts the unit to a new use is generally an improvement, which you capitalize and depreciate. Getting this wrong in either direction costs money, either now or when you sell.

Portland rental registration and Schedule R

Portland City Code requires annual registration of residential rental property in the city. According to the Revenue Division, the requirement applies to all residential rental property owners and property managers. You list each unit and its address on Schedule R with your combined business tax return.

There is a fee per unit. For tax year 2025 it was $70 per unit, due by the original due date of the combined business tax return, which is generally 4/15. Units regulated at or below 60% of Area Median Income are exempt from the fee but still need to be listed. Owners with 10 or more units can use the city's import spreadsheet.

Late or missing filings can bring penalties and interest, so a CPA usually handles Schedule R at the same time as your return.

Relocation assistance and other Portland rules with tax effects

Portland has mandatory renter relocation assistance under City Code 30.01.085. The city lists five triggers, including a no cause eviction, a rent increase of 10% or more over 12 months and nonrenewal of a fixed term lease that does not convert to month to month. It does not apply to for cause terminations.

The amounts are set by unit size: $2,900 for a studio or single room unit, $3,300 for one bedroom, $4,200 for two bedrooms and $4,500 for three or more. The city also lists exemptions you can apply for in some cases.

These payments are a real cost of running a Portland rental. Your CPA can show how a payment is treated on your return and help you plan for it when you are thinking about a rent increase or a sale.

Records matter here as well. Keep copies of notices you send, the date of any rent increase and proof of payment for any relocation assistance. Those documents support both your compliance with city rules and the deduction or adjustment on your return.

The combined Portland and Multnomah County business tax return

Because rentals count as a business in Portland, many landlords file the combined City of Portland and Multnomah County business tax return. On the 2025 form for individuals, the Business License Tax rate is 2.6% and the Multnomah County Business Income Tax rate is 2%, each with a $100 minimum.

Whether you owe tax, and how much, depends on your net rental income and the exemptions in that year's instructions. Even when no tax is due, the city says you still need to register your units.

The return also has an owner's compensation deduction line, and the instructions for each tax year explain how it applies. For a landlord who manages their own units, that detail can change the result. Filing on extension is allowed, and the city says you can submit Schedule R with the return when you file, but the registration fee is still due by the original due date.

Losses, selling and long term planning

Rental expenses can be larger than rental income, especially in the early years with depreciation. The IRS allows that, subject to passive activity limits. How much of a loss you can use this year depends on your income and how involved you are in managing the property.

Selling a rental brings its own questions, including depreciation you took in past years and how the gain is taxed. Planning a year or two ahead gives you more options than calling a CPA after the sale closes.

Higher income landlords should also watch the Metro Supportive Housing Services and Multnomah County Preschool for All personal income taxes. Rental income adds to the taxable income those taxes are based on, so a strong year or a sale can push you over the thresholds.

Common questions