Schedule E Line 10:
Legal & Professional
Last updated: December 2025 • Reviewed by Taxstra CPAs
Schedule E Line 10 is for fees paid to attorneys, accountants, and other experts to help you operate your rental business. Deductible examples include eviction legal fees, lease drafting, monthly bookkeeping costs, and the portion of your CPA's bill for preparing Schedule E. However, be careful: legal fees paid to *purchase* the property (title search, closing attorney) are not deductible here—they must be added to the building's cost basis.
Deduct (Line 10)
- • Tax Preparation Fees (Schedule E portion)
- • Eviction Legal Fees
- • Lease Drafting Fees
- • Monthly Bookkeeping Fees
- • Annual LLC Filing Fees (Operating)
Capitalize (Add to Basis)
- • Title Search Fees (Purchase)
- • Closing Attorney Fees (Purchase)
- • Zoning Change Legal Fees
- • Cost of Forming the LLC (Initial)
The "Startup Cost" Exception
Normally, costs incurred before a rental property is "placed in service" (ready for tenants) are not deductible. However, you can elect to deduct up to $5,000 of these "Startup Costs" (like LLC formation fees or pre-opening legal advice) in the first year.
*This election is not automatic. Your CPA must make it on your first tax return for the entity. Excess costs are amortized over 15 years.
Audit Defense Checklist
Frequently Asked Questions
Are CPA fees deductible?
Yes, the portion of your tax preparation fees related to your rental real estate (Schedule E) is fully deductible on Line 10. Ask your CPA to itemize their invoice.
Are legal fees to buy property deductible?
No, legal fees paid to acquire a property (closing attorney, title review) are generally capitalized—added to the cost basis of the building—and depreciated.
Are eviction costs deductible?
Yes. Legal fees, court costs, and sheriff fees paid to evict a tenant or collect back rent are ordinary and necessary rental expenses.
Is bookkeeping software deductible?
Usually yes. Software used to track rental income and expenses (like QuickBooks or specialized rental software) is deductible.
Updated for 2025 tax year
Reviewed by Taxstra CPAs
Educational guidance for real estate investors. Reviewed internally by Taxstra CPAs.