I own a few rental properties which I report on schedule E. Can I deduct home office expenses? If so where do I enter these expense?

[MarilynG]

If you are self-employed as a Property Manager (real estate professional) you can deduct Home Office Expenses on your Schedule C for self-employment income and expenses.

If you are currently reporting rental properties on Schedule E, there are 'office expenses' you can deduct, which could include supplies, a printer, phone, etc.  

One of the biggest deductions is usually vehicle mileage; and of course, you are claiming mortgage interest, property tax, insurance, HOA fees, etc.

Here's some helpful info:

https://ttlc.intuit.com/replies/4209856

[hongmeizhang2002]

activating this thread as I run into exactly the same situation. I don't think the question was answered. I understand there are office supply expenses I can deduct in schedule E, but the questions are: can we take home office use deductions as landlords? And if yes, where do we deduct it?

Thanks!

[KrisD15]

No, not on Schedule E. 

Home office may only be reported on Schedule C or Schedule F. 

According to the IRS:

"Self-Employed Persons

If you use your home in your trade or business and file Schedule C (Form 1040 or 1040-SR), report the entire deduction for business use of your home on line 30 of Schedule C (Form 1040 or 1040-SR). Whether you need to complete and attach Form 8829 to your return depends on how you figure your deduction. See Line 30 in the Instructions for Schedule C for more information.

If you use your home in your farming business and file Schedule F (Form 1040 or 1040-SR), report your entire deduction for business use of the home on line 32 of Schedule F (Form 1040 or 1040-SR). Enter “Business Use of Home” on the dotted line beside the entry."

IRS Pub 587

[Carl]

Rental property reported on SCH E does not qualify for a home office. Period.

[RHCLLC]

Reporting operating Expenses, for running a rental management company on Schedule C results in a loss since all of your Rental income is reported on Schedule E. With a loss on Schedule C you can not take the Business Use of your Home deduction because it only applies if you have a profit.  Isn't there a way to include the Business Deductions that are not tied directly to one of your properties on Schedule E or a way to combine Schedules C and E?

[KrisD15]

You would have to file Schedule C as a Property Management Business. 

You would have to charge a fair fee, (with the intent to make a profit)

You would be wise to have the monthly management fee on the listing agreement you use for the tenant. 

You would need to keep a separate banking account for the business. 

You could then report the Home Office Deduction. 

You would also be liable for Self-Employment tax on the profit. 

@RHCLLC 

[Carl]

Rental property reported on SCH E is not allowed a home office deduction unfortunately. If you were "in the business" of property management as a property manager, then you'd be reporting on SCH C where a home office claim/deduction is allowed.

[RHCLLC]

Maybe I need to phrase this question differently.  I own three rental properties that I manage.  All income and expenses related to those properties is reported on schedule E. I have other expenses such as office supplies, computer, software, etc. that I incur as the result of managing those properties How and where do I report those expenses. 

[Carl]

I have other expenses such as office supplies, computer, software, etc. that I incur as the result of managing those properties
Those would be claimed on line 15 - Supplies, on the SCH E. The computer itself would actually be reported as a rental asset. But I seriously doubt you use that computer 100% for your rentals. But maybe you do for all I know? Claiming it as an asset wouldn't make a penny of difference on your tax liability. If the computer really is for 100% rental property management use and costs less than $2,500, then you can just expense it in the tax year it was purchased,provided it was purchased for the sole reason of managing the rentals, and that's all it's ever been used for and will ever be used for.
I've got 3 rentals of my own, and can state for a fact that trying to claim the cost of a typical computer or any portion there-of makes absolutely no difference in your tax liability what-so-ever. Especially if you show a loss on the SCH E each year, which is very common for long term residential rental property.

[Tootaxy]

Do you have to allocate those expenses to each property location OR is there a way to capture just the totals? 

[DianeW777]

To make it simple, I suggest you use your home office on only one rental activity. It would get quite complicated to try to enter the actual asset under several different properties and it's not necessary.  

Also, it's quite likely it will be much easier for the long term if you allocate the expenses yourself.  Even though you are taking into consideration all rentals, your home office square feet is actually the same so the business use percentage would be office square feet divided by the total square fee of the home.

Be sure to separate out the land portion of the home.  You can use the city or county tax assessment records to figure out home versus land value.  When you enter the home asset for depreciation, be sure to enter only the business use percentage of the cost (when a personal use asset, like your home as example, is converted to business use, then the actual cost basis is the lesser of fair market value (FMV) on the date of conversion or the actual cost).  For a home, most commonly, the cost is lower than the FMV.

De Minimis Safe Harbor Election (mentioned by Carl here are the details)

This election for items $2,500 or less is called the De Minimis Safe Harbor Election. This election is an option you can take each year that lets you write off/deduct items $2,500 or less as expenses instead of assets. Expenses typically reduce your income by a larger amount than depreciating an asset over multiple years does. This means you could get a bigger refund.

If you decide to take this option, a form called De Minimis Safe Harbor Election will show up in your tax return. This election will apply to all your businesses, rental properties or farms.

Here are the rules you need to meet to take this election:

• You don't have an applicable financial statement (most people don't).
• You have a consistent process for how you record expenses and assets.
• You record these items as expenses on your books/records.
• The cost of each item as shown on your receipt is $2,500 or less.
• Rental Property select Edit > Other expenses > Other Miscellaneous Expenses
• Enter Description (Safe Harbor ...) and amount (not entered as assets under this election)

@Tootaxy