@ladylake wrote:
Per the Schedule E worksheet the expenses were allocated to Columns (c), (d) and (e). In spite of some of the expenses being limited as "Vacation Home Loss Limitation" TT is still allowing a rental loss on Form 1040 based on a definition of a non passive activity found in Pub 925. (page 5).
That would be because the expenses allocated to rental use are not limited by the passive activity rules.
An example (a very crude example) would be as follows:
Rental income: $10,000
Commissions: $5,000
Advertising: $5,000
Management fees: $5,000
Supplies strictly for rental use: $5,000
Loss: -$10,000
The net loss is considered to be nonpassive (and deductible from all other income) since the expenses listed are allocated exclusively to rental use.
