I am looking through your return. I am using Topic no. 415, Renting residential and vacation property as a stating point. It states:
A day of personal use of a dwelling unit is any day that the unit is used by:
- You or any other person who has an interest in it, unless you rent your interest to another owner as their main home and the other owner pays a fair rental price under a shared equity financing agreement
- A member of your family or of a family of any other person who has an interest in it, unless the family member uses it as their main home and pays a fair rental price
- Anyone under an agreement that lets you use some other dwelling unit
- Anyone at less than fair rental price
Assuming you had 15 days of actual personal use, Topic no. 415, Renting residential and vacation property
You won't be able to deduct your rental expense in excess of the gross rental income limitation (your gross rental income less the rental portion of mortgage interest, real estate taxes, casualty losses, and rental expenses like realtors' fees and advertising costs). However, you may be able to carry forward some of these rental expenses to the next year, subject to the gross rental income limitation for that year.
Please take a look at your Sch E worksheet. You will see your expenses on the left, what is allowed to be reported on the Sch E and then the last two columns are the division between rental and personal use.
- None of the personal use expenses can be deducted or carried forward.
- Your Sch E allow the management fees, mortgage interest and real estate tax. The other items are prorated.
- I can see the Sch E limiting as it should.
Let's talk about the carryovers for next year. You said it should be $60,000 in operating costs but that isn't the case. The $27,121 is the business use portion of the home and the full depreciation amount of $22,964 is being carried forward. The remaining difference is from your personal use of the property. You can't claim a business loss on your personal use of the home.
References:
About Form 8582, Passive Activity Loss Limitations
About Schedule E (Form 1040), Supplemental Income and Loss
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