How to Enter a 6 month rental of my residence?

[TechieGal]

I rent out my summer residence for 6 months every winter. I use it exclusively 50% of the time, and rent it exclusively 50% of the time. I think I should be able to deduct 50% of my expenses, and 50% of my annual deprecisation. Turbotax wants to treat it as a vacation rental and limit my deductions to the amount of income. I entered 183 days rental use, and 182 days personal use. Where did I go wrong?

[Cynthiad66]

Yes you can claim your rental property on Schedule E.

To enter your rental:

Use the link below for for further details on entering your deduction

Where Do I Enter Rental Income and Expenses

1. In TurboTax, search for rentals and select the Jump to link at the top of the search results.
2. Answer Yes to the question Did you have any rental or royalty income and expenses in 2021 for property you own?
3. Follow the on-screen instructions as you proceed through the rental and royalties section.

[Carl]

Understand that days of personal use *DO* *NOT* include the period of time it was not classified as a rental.

[tagteam]

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@TechieGal wrote:

Turbotax wants to treat it as a vacation rental and limit my deductions to the amount of income. 

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Per Section 280A of the tax code, that would be the correct treatment for your scenario.

[Carl]

wants to treat it as a vacation rental

Edited 1/25/2022: Original response did not compute the fact that this is a vacation rental per IRS rules. Since you did not rent or attempt to rent the property for the entire tax year, it's a vacation rental. So personal use days outside of the period it was classified as rental property "do" count for some of the incurred rental expenses.

[TechieGal]

Thanks Carl. I entered that it was rented for 183 days. I entered 0 for personal use days. Turbotax used to give me an error message if the total number of days was less than 365, but this glitch seems to have been corrected.

[TechieGal]

Thanks but I'm way past that point.

[TechieGal]

I don't agree. See Carls answer - it's only a rental property for 6 months. The 6 months when I live there do not count as personal use days of a rental.

[tagteam]

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@TechieGal wrote:

I don't agree. See Carls answer - it's only a rental property for 6 months. The 6 months when I live there do not count as personal use days of a rental.

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You need to consult with a tax professional if that is your position on this matter. 

Frankly, you are dead wrong. Read Section 280A of the Internal Revenue Code, specifically Sections 280A(d) and 280A(e).

https://www.law.cornell.edu/uscode/text/26/280A

[TechieGal]

I agree with your earlier statement that it was not a rental for the 6 months I lived there.

[tagteam · Accepted solution]

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@TechieGal wrote:

I agree with your earlier statement that it was not a rental for the 6 months I lived there.

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You have a typical, run-of-the mill, plain vanilla, vacation rental with 182 days of personal use during the tax year.

As a result, the expenses you can deduct are limited per Section 280A. 

Expenses that are directly allocable to rental use (such as commissions, management fees, advertising, repairs during rental use) are generally deductible in full. However, other expenses (such as property taxes, interest, utilities, insurance) are subject to the limitations.

[TechieGal]

Thanks. It seems the rules have either changed or been clarified. I will make it a vacation rental now. Any idea when this change happened? I may need to go back and amend my returns.

[Critter-3]

The vacation home rules have been in existence for decades.  I learned these rules 30 years ago and they were old then. 

[tagteam]

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@Critter-3 wrote:

The vacation home rules have been in existence for decades.  I learned these rules 30 years ago and they were old then. 

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Same here and if @TechieGal is considering amending prior year returns, a local tax professional should be consulted.