Section 179 carryover for a vacation rental property shows as an error

[Hmikehw]

An error is flagged in my Schedule E Worksheet.  It shows up under "Carryovers to 2024 Smart Worksheet", in the "Regular Tax" column on Line A "Section 179 Carryover".  The error is flagged as "Check This Entry" and reads "Schedule E Worksheet: Sec 179 Carryforward-Reg should not be entered, because this is not a commercial property".  But I didn't enter this manually and it was carried forward from a tax return prior to 2018 (it shows up further down on the worksheet in the "Regular Tax" column, under "Disallowed Section 179 Deduction by Year, Line A "Before 2018".  It wasn't something I ever entered manually and the software has never complained about it before.  How should I resolve this?

[PatriciaV]

You may have Section 179 carryovers from property that wasn't eligible for this deduction. If you didn't amend the prior year return that generated this carryover, the deduction is lost. 

To resolve the error message, delete the amount shown for the Section 179 carryover in the Carryovers to 2024 Smart Worksheet Line A.

[edited to clarify source of carryover 2/24/25 | 12:12 PT]

[AmeliesUncle]

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@PatriciaV wrote:

The Section 179 deduction for property used for rental properties was retroactively disallowed in 2022.

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Where are you getting that information?  Section 179 has not been amended since 2018.

[user33]

I have the exact same problem with my rental property.  The 'check for errors' step is flagging it as an error. If section 179 depreciation is no longer allowed why did Turbotax compute it on both my 2023 and 2024 returns?!

[Robynn]

I am having the same problem.  Is there any more advice?

I can't delete all the entries.  The QBI carryover, I know the answer to (form 8895, line 16), but where does the "regular tax" information come from.

[DawnC]

You need to delete the amount and leave that field blank to clear the error.   It will calculate the Sect 179 amount, but it doesn't allow the deduction because Schedule E doesn't allow the deduction.  To deduct Sect 179 expense, your activity must be from commercial property (check your property type) and be a trade or business, using Schedule C.    There is a Learn More link that explains it is not allowed when going through the interview.    The amount is calculated for QBI purposes only.    @user33 

[DawnC]

Were you able to get your carryovers correctly entered, @Robynn?    Your situation appears to be different than the issue discussed here, so you can let us know what version you are using and what the error(s) is/are.....

[AmeliesUncle]

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@DawnC wrote:

To deduct Sect 179 expense, your activity must be from commercial property (check your property type) and be a trade or business, using Schedule C.    There is a Learn More link that explains it is not allowed when going through the interview.  

Although there are several restrictions with Section 179 in relation to rental property, it does NOT need to be for a commercial property.  If the Learn More link says that, that is REALLY outdated.  That changed somewhere around 2017/2018.