lorhaku
Returning Member

Schedule E IRS Pub 527 Worksheet 5-1 Missing

I've already gotten some help with this but am finding more limitations with TurboTax Premier 2024 and a vacation home:

 

Situation: I have a primary and second home, both homes mortgage combined is >750,000 allowable personal limit which limits me to ~0.6 of all my interest.  I also do short term rental of the second home (it IS a second home as I meet the 14 day/10% threshold of personal use).  Per IRS Pub 527, worksheet 5-1 there is an ordering of expenses that are allowed to show a loss as well as how they carryover.

 

I paid ~45k of interest for the second home.  I also used the home for 51 days and rented for 33 days.

I think, this is how it is supposed to work:

Normally allowable interest on second home = 27,000 (=45,000 * 0.6)

Schedule E Reported Interest = 27,000 * 33/84 (IRS Method) = 10,607

Schedule A Reported Interest = 27,000 * 51/84 (IRS Method) = 16,393

 

Now, because I report a LOSS, the allowed 10,607 is allowed, per pub 527 worksheet 5-1, to be a net loss (minus rent).  However, since I report the loss, I should also get to claim any unallocated interest in future years from the rental portion of the second home interest, that is:

45,000 * 33/84 = 17,679 (total allocated to rental use)

17,679 - 10,607 (allocated limited interest) = 7,072 --> this should be carried forward to future years since I cannot have a "loss" more than my 10,607 per the IRS Pub 527 worksheet 5-1.  

 

A) Is this all correct?

A1) TurboTax actually applies the whole 17,679 and allows it as a LOSS - I've already confirmed with the programmers this is an error

B) How in the world do I do this on TurboTax Premiere?  It looks like the software just flat cannot handle second home mortgages >750,000 that are also rentals creating a net loss.  TT doesn't include the worksheet 5-1 from Pub 527 to correctly calculate this.  When I try to manually do the work and add it to schedule E, it is all hard coded on the ratios and the schedule E "worksheet" sections so I cannot bring the right values to the right spot.