Quarterly Estimated Taxes for Rental Property Investors

No tax is withheld from rent, so if your rental profit and other income will leave you owing at least $1,000 for 2026 after withholding and refundable credits, you generally need to make quarterly estimated payments or have more tax withheld from a paycheck or pension. You avoid the underpayment penalty if your withholding and on-time payments cover at least 90% of your 2026 tax or 100% of your 2025 tax, which rises to 110% if your 2025 adjusted gross income (AGI) was over $150,000 ($75,000 married filing separately). The 2026 payments are due April 15, June 15, and September 15, 2026, and January 15, 2027.

Do you need to make estimated payments?

For 2026, you generally must make estimated payments when both of these are true:

1. You expect to owe at least $1,000 in federal tax after subtracting withholding and refundable credits.
2. Your withholding and refundable credits will be less than the smaller of 90% of your 2026 tax or 100% of the tax on your 2025 return (110% if your 2025 AGI was over $150,000, or $75,000 married filing separately). The 2025 return must cover a full 12 months.

For a rental, the figure that matters is net rental income after expenses and depreciation, not the rent you collect, and the real estate tax deductions checklist lists what you can subtract. If your modified AGI (your AGI plus any foreign earned income you exclude) will be above $200,000 ($250,000 married filing jointly, $125,000 married filing separately), include the 3.8% net investment income tax, which applies to rental profit and other investment income up to the amount your modified AGI is over that threshold. Add self-employment tax only if some of your rental income is subject to it; tax planning strategies for rental property income explains when that happens.

The 2026 due dates

You can skip the January 15, 2027 payment if you file your 2026 return by February 1, 2027 and pay the whole balance with it. You can pay from a bank account at no cost with IRS Direct Pay, through your IRS Online Account, or by card through a processor that charges a fee. A check mailed with a Form 1040-ES voucher counts as paid on its U.S. postmark date, which the IRS warns is the day a postal facility processes the envelope, not necessarily the day you mail it, so pay electronically when a due date is close.

The safe harbors that prevent a penalty

The IRS figures the penalty separately for each installment that is late or short, as interest on the shortfall for the days it stays unpaid. The rate is set each quarter: 7% a year for October through December 2026, about 19 cents a day for each $1,000 underpaid. Paying the full balance when you file does not erase a penalty that built up on an earlier installment. You owe no penalty if any of these safe harbors applies:

• Your 2026 tax minus withholding is less than $1,000.
• You paid at least 100% of your 2025 tax (110% if your 2025 AGI was over $150,000) through withholding and four on-time installments.
• You paid at least 90% of your 2026 tax the same way.
• You had no tax liability for 2025, were a U.S. citizen or resident for all of that year, and your 2025 return covered 12 months.

The prior-year safe harbor is the one you can figure exactly in advance, because it uses the tax on a return you already filed. Under it, a large gain later in the year does not raise your required payments, though you still owe the rest of the tax when you file. The IRS can also waive the penalty after a casualty, disaster, or other unusual circumstance, or if you retired after age 62 or became disabled during the tax year or the year before and the shortfall had a reasonable cause.

Example. A married couple's 2025 return showed $26,000 of total tax on AGI of $200,000. Their employers will withhold $22,000 in 2026, and they sell a rental in November 2026, which raises their 2026 tax to $64,000.

1. Prior-year safe harbor: 110% x $26,000 = $28,600, because their 2025 AGI was over $150,000.
2. Current-year safe harbor: 90% x $64,000 = $57,600.
3. Required annual payment: the smaller amount, $28,600, or $7,150 per installment.
4. Shortfall after withholding: $28,600 minus $22,000 = $6,600, covered by four $1,650 estimated payments or by extra withholding.
5. Balance due with the 2026 return by April 15, 2027: $64,000 minus $28,600 = $35,400, with no underpayment penalty.

Capital gains tax on investment property shows how the tax on a sale like this is figured.

Raising withholding instead of paying estimates

If you have a job or a pension, you can have more tax withheld instead of mailing estimated payments. On a new Form W-4, enter your expected rental income in Step 4(a), "other income," or a flat extra amount per paycheck in Step 4(c). Retirees can use Form W-4P for a pension or annuity and Form W-4R for an IRA distribution or other nonperiodic payment.

Withholding has a timing advantage: unless you elect to use the actual dates, one-fourth of the year's withholding counts as paid on each installment due date, no matter when it came out of your pay. That makes extra withholding a way to fix missed installments. If the couple in the example had paid nothing extra by late October 2026, having $6,600 more withheld from their November and December paychecks would cover all four installments, while a $6,600 estimated payment on January 15, 2027 would leave the first three installments short.

A large gain late in the year: the annualized income method

The regular method splits your required annual payment into four equal installments. That works against you when 90% of your 2026 tax is the smaller safe harbor amount, for example because your 2025 tax was higher: the tax on a November sale then raises all four installments, including the three due before the sale.

The annualized income installment method, on Schedule AI of Form 2210, figures each installment from the income you actually received through March 31, May 31, August 31, and December 31. A gain in November then raises only the January 15, 2027 installment, which has to bring your total withholding and estimated payments for 2026 up to 90% of your 2026 tax. To use the method, file Form 2210 with Schedule AI with your 2026 return, even if no penalty is owed.

State estimated taxes follow their own rules

States with an income tax set their own estimated payment rules, and they do not always match the federal ones:

• California requires payments if you expect to owe at least $500 ($250 married filing separately) and your withholding and credits will be less than the smaller of 90% of this year's tax or 100% of last year's. The 2026 installments are uneven: 30% by April 15, 40% by June 15, nothing on September 15, and 30% by January 15, 2027. The 110% prior-year rule applies above $150,000 of prior-year California AGI ($75,000 married filing separately), and if your 2026 California AGI is $1,000,000 or more ($500,000 married filing separately), you must base payments on 90% of the current year's tax.
• New York requires payments unless you expect to owe less than $300 each of New York State, New York City, and Yonkers income tax after withholding and credits. It uses the same 90%, 100%, and 110% tests, with the 110% rule tied to prior-year New York AGI over $150,000 ($75,000 married filing separately).

If your rental is in another state, check that state's nonresident filing and estimated tax rules as well; state tax considerations for real estate investors covers filing in more than one state and state withholding when you sell.