Written by Adam R. Kendall Abplanalp, CPA
NEW CITY OF PORTLAND RENTAL REPORTING REQUIREMENTS — WHAT YOU SHOULD KNOW
Starting with the 2018 tax year (for tax returns filed in 2019), the City of Portland has introduced a new Residential Rental Registration Program. This is being administered as part of the existing City of Portland Business License Tax / Multnomah County Business Income Tax program. Since all owners of residential property within the City of Portland received a notice about Schedule R in early 2019, this may have caught some property owners off guard. This article addresses some of the most common questions that we’ve fielded at The Cobalt Group since this was rolled out at the beginning of 2019. What is Schedule R? It’s a form that should be attached to your City of Portland / Multnomah County annual tax return (or annual exemption form). It lists the residential rental units you own that are within the City of Portland. For now, there is no tax or fee due with the form — it is simply being used by the City to get an inventory of all residential rental units. How do I file Schedule R? You cannot not file Schedule R on its own. You must complete and attach Schedule R to your City of Portland / Multnomah County Return. This return is filed on Form SP-2019 (for individuals who directly own their properties) or on Form P-2019 or SC-2019 (if you own properties in a multiple-member LLC or S-Corporation). If you meet one of the exemptions for the City of Portland / Multnomah County tax, you are still required to file the Schedule R with your Annual Exemption Request (on Form AER). Do I have to file a City of Portland / Multnomah County return? Yes, if you have business activity within the City or County. Rental property ownership is considered to be a business activity, and is subject to the tax. There is an exemption available if all of your business activities inside and outside of the city have gross revenue of less than $50,000 for the year. In this case, you still file Form AER to claim the Annual Exemption from the tax, and you should attach your Schedule R to the Form AER. There are other exemptions available for either the City or County returns, but all businesses operating within the city (including rentals) require either a return or AER to be filed. In certain circumstances, one or two residential rental units owned by an individual or couple may be eligible for the “De Minimus Exemption” from City / County filing requirements. Annual filing of the Schedule R is still required in these situations. Consult your tax advisor or the information on the City of Portland Revenue Bureau’s website for more information on this. What happens when I file for the first time? If you file for 2018, but were subject to the tax for previous years, you should work with the City of Portland Revenue Bureau to determine whether you were exempt for those years, and if not, to file and pay the appropriate taxes. The City’s Revenue Bureau staff is very helpful in these situations and will work with you or your tax advisor to make sure your account is up to date. If you have been filing City / County returns for prior years, you simply add the Schedule R to your annual return when you submit it for 2018. My tax preparer (or TurboTax) never told me about this. Why do I have to file now? The City of Portland and Multnomah County business income taxes have been around for a long time. This is not a new requirement, but some online software and/or tax preparers (especially if they are not local) may not know about the requirement or how best to file City / County returns. Consult with a local tax advisor who can give you customized advice if you have questions or need to catch up on prior year returns. Now that the Schedule R will be required to be filed each year, this has brought the City of Portland / Multnomah County returns to light — but they are not a new requirement. Shouldn’t my property manager do this for me? Typically, property owners are responsible for filing tax returns and paying taxes on their income. Though your property manager may manage the day-to-day aspects of your property, they do not have all of the information to prepare your City / County tax returns and cannot file the Schedule R on your behalf separately from your tax returns. This is best left to your income tax preparer, who should understand the City / County requirements and file the Schedule R with the rest of your tax returns. Where do I go for more information? Call your tax preparer! You can also find resources on the City of Portland Revenue Bureau website related to Schedule R and the City of Portland / Multnomah County tax returns in general. Start with https://www.portlandoregon.gov/revenue/ About The Author Adam R. Kendall Abplanalp, CPA is the President and CEO of The Cobalt Group, Inc., a public accounting firm based in Portland that provides accounting, tax, and advisory services exclusively to rental property owners, managers, investors, and developers. We work with serious rental owners and investors to develop customized services to build, maximize, and execute on tax and business strategies for real estate. For more information, or to schedule a consultation with our team, give us a call at 503-239-8432 or email info@thecobaltgrp.com.
Disclaimer Please note that the advice contained herein is not specific to any particular tax situation, is not intended or written by The Cobalt Group to be used, and should not be used, to avoid penalties that may be imposed by any government agency, to avoid any tax that is properly due, or to promote, market, or recommend to another party any of the matters addressed herein. The Cobalt Group makes no warranty, express or implied, with respect to the information set forth herein, and the distribution of this information does not constitute the provision of legal, tax, accounting, investment, or other professional advice.
Adam R. Kendall Abplanalp, CPA President and Chief Executive Officer
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