I have rental properties entered in my return and I use a home office to manage these properties and store things like tools and spare parts.

[nick616]

When I enter the home office under a business expense it is saying unallowable because I did not make any profit (incorrect as the profit shows $30,000+).  Seems like the link between my rental properties and the home office are not connected.

[PatriciaV · Accepted solution]

Unfortunately, income from Schedule E does not qualify for the home office deduction, as the IRS considers rental property income as passive.

For this reason, there is no Home Office section for Schedule E in TurboTax. If you entered your home office information under the Business tab, you must also report Business Income for Schedule C. In some cases, rental activity does qualify as Schedule C activity (for real estate professionals). In this case, you would be able to take the Home Office Deduction.

To qualify for a home office deduction you must have a trade or business (Schedule C), a farm/ranch (Schedule F), or be an employee who is required by the employer to maintain a office in their home.