Thanks. It is a fairly complicated flow chart. I took a look at pub. 527. If I move back into my house after 11 months instead of 12, then I would count the days before and after the tenancy as personal use days. In both 2022 and 2023, my personal use days would exceed the greater of 14 days or 10% of the rental use days. So my dwelling unit would be considered a home.
I am not sure, however, that this would make any difference to which method I must use to determine what part of my expenses are deductble, based on the ratio of days of rental use to total days of use, or based onit when the expenses were incurred. I also think that in both cases, the total deductions would be limited to gross income subject to the PAL rules, with excess carried forward.
Looking at the special circumstance in chapter 4 of pub 527:
If you change your home or other property to rental use at any time other than the
beginning of your tax year, you must divide yearly expenses, such as taxes and insurance,
between rental use and personal use. You can deduct as rental expenses only the
part of the expense that is for the part of theyear the property was used or held for rental
purposes.
I think that is the case whether or not the dwelling unit is considered a home. They give the following example:
"You moved from your home in May and started renting it out on June 1. You can deduct
as rental expenses seven-twelfths of your yearly expenses, such as taxes and insurance.
Starting with June, you can deduct as rental expenses the amounts you pay for items generally billed monthly, such as utilities."
What about expenses, like repairs, that are neither billed annually, nor monthly? If I make necessary repairs before the tenant moves in, can I deduct some of that expense using the days of use allocation method?
In 2023, the my house will start the year in rental use, so I would think the special rule above would be inapplicable and I would allocate all expenses according to days of personal v. rental use. Or is the allocation method only used in the special case where someone rents out a dwelling unit year after year, with some personal use days mixed in along the way?
Sorry to turn this question into a dissertation. Thank you for any advice!!
