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UpNorth2
New Member

Can I take the home office deduction if I actively manage our one vacation home rental personally?

 
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MichaelDC
New Member

Can I take the home office deduction if I actively manage our one vacation home rental personally?

Probably not. Passive income does not qualify for the home office deduction, and the IRS considers rental property income as passive. .There are only two places you can claim a home office and there is an issue with both. 

The first is on form 2106 if you are an employee, which you are not for your rental business. The second is on Schedule C Profit or Loss from Business. Your rental income is, I would imagine, entered on Schedule E. If you provide services, such as a Bed and Breakfast might, then you would put income on the Schedule C. 

If you have no income on Schedule C, then the Home Office can't generate a loss. This is from Schedule C instructions: 

Gross income limitation. The amount of your deduction is still limited to the gross income derived from qualified business use of the home reduced by the business deductions that are not related to your use of the home. If this limitation reduces the amount of your deduction, you cannot carryover the difference to another tax year.

Below are some additional links that may help you:

https://www.irs.gov/uac/newsroom/home-office-deduction-a-tax-break-for-those-who-work-from-home

https://www.irs.gov/pub/irs-pdf/i1040sc.pdf

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1 Reply
MichaelDC
New Member

Can I take the home office deduction if I actively manage our one vacation home rental personally?

Probably not. Passive income does not qualify for the home office deduction, and the IRS considers rental property income as passive. .There are only two places you can claim a home office and there is an issue with both. 

The first is on form 2106 if you are an employee, which you are not for your rental business. The second is on Schedule C Profit or Loss from Business. Your rental income is, I would imagine, entered on Schedule E. If you provide services, such as a Bed and Breakfast might, then you would put income on the Schedule C. 

If you have no income on Schedule C, then the Home Office can't generate a loss. This is from Schedule C instructions: 

Gross income limitation. The amount of your deduction is still limited to the gross income derived from qualified business use of the home reduced by the business deductions that are not related to your use of the home. If this limitation reduces the amount of your deduction, you cannot carryover the difference to another tax year.

Below are some additional links that may help you:

https://www.irs.gov/uac/newsroom/home-office-deduction-a-tax-break-for-those-who-work-from-home

https://www.irs.gov/pub/irs-pdf/i1040sc.pdf

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