How do I complete schedule E part 1 line 2 for a sublease of my office?

[HJ66]

I do not own my office space and sublease it for two days a week. In 2017, I collected sublease rent for Nov and Dec, as well as for Jan 2018 rent (which I believe is taxable in 2017 income).

[DianeW · Accepted solution]

Yes, you report all income actually received in 2017 on your tax return even if the rent paid in December is for January, 2018. For Schedule E, Part 1, line 2 this would be considered "Commercial" rental because it is not a residential space for family living, but an office space for business activity.

You can enter your office rental activity by using the steps below.

1. Sign into your TurboTax account (online or desktop)
2. In the search box, upper right > Search for rentals > Jump to rentals
3. Continue to edit or update the property
4. Click the images attached to enlarge and view for assistance.

[HJ66]

The step-by-step ask who owns the property. The answer is the landlord...NOT me. For now, I checked myself, but that isn't true. Is there a better choice? Also, since Schedule E, Part 1, line 2 would be considered "Commercial" rental, do I even need to fill out this line? For now, I entered  61 days rental and zero days personal.

[DianeW]

@HJ66 You do have to say you own the property to enter the rental correctly.  And you will not enter a rental unit under depreciation as an asset because you don't own a property. You should get the right results by your entry.

[HJ66]

I am still confused about line 2...Do I need to enter 61 days rental and zero days personal or do I leave both boxes blank? This is a commercial office NOT used for personal purposes. The Turbotax program does not adequately explain what to do.

[DianeW]

Yes, use zero personal days for your purposes.  It's probably because of your selection on the situation page, but you can continue with 61 days business and 0 personal use. Then include the rental income.  The expenses would be minor because you would be taking them on your business schedule.

[dr-nmayeda]

I have the same situation with subletting of my rental office space. So personal use doesn't mean the days I am using the office vs. my sublessee? And I still put the total rent I pay to the owner on my Schedule C, yes? Thanks for the help.

[HJ66]

After talking to a TurboTax support person, after posting my question, I concluded that entering zero personal use days was NOT correct. I considered that personal use consisted of the days that I used the office space vs. the days that the sublessee used the office space. In my situation, the sublease was for only part of 2017. On Schedule E, Pt 1, Line 2, I entered 15 days "Fair Rental Days" and 55 days "Personal Use Days".  Note that I concluded that line 2 is really meant for residential sublease, not Commercial (Type 4 property).
Yes, the rent paid to the owner is put onto schedule C. The sublessee rent goes onto schedule E.
Hope this helps!!

[dr-nmayeda]

It does help, thanks for sharing!