Is there any way to use Turbotax once you have decided to aggregate your rental properties? I see comments that Turbo tax can't do the calculations.

[mmiksell]

I plan to make an election this year under Section 469(c)(7)(a) election to group my properties.  Yes, I am aware of the implications and do qualify as a real estate professional.  I see previous comments that that Turbo Tax doesn't support the election and it will need to be done manually and will have to mail returns, which is fine, however I also saw a comment that turbo tax doesn't support the calculations of the properties being grouped, so the questions are (1) Does Turbo Tax even allow me to show the properties as group?  If so, how?  2020 I had 2 properties listed which I believe I checked some box to say they are group, however they look to me on the screen like two separate properties with separate net income calculations.  Now I have 3 more and would like to group all together.  This is the first year that I qualify for real estate professional.  (2) If TT does allow to group the properties, is it true it cannot do the calculations and if so, does that mean turbo tax can no longer be of use?

[AliciaP1 · Accepted solution]

The best way to report this is to report your "grouped properties" as Schedule C self-employed income.  Since you qualify as a real estate professional this year, you should file as a real estate business.  You can use TurboTax Online Self-Employed or TurboTax Home & Business to do this.

Per Publication 527 from the IRS:

Generally, Schedule C is used when you provide substantial services in conjunction with the property or the rental is part of a trade or business as a real estate dealer. Providing substantial services. If you provide substantial services that are primarily for your tenant's convenience, such as regular cleaning, changing linen, or maid service, you report your rental income and expenses on Schedule C.

• Advantage:  Losses reported on a Schedule C are not limited by the Passive Activity Loss Rules.  
• Disadvantage: Income on Schedule C is subject to Self Employment Taxes.

Schedule E: 

If you file a Schedule E, you may be able to deduct up to $25,000 of losses from a Schedule E if you Actively Participate in the rentals.  The IRS defines Active Participation as: 

 If you rent buildings, rooms, or apartments, and provide basic services such as heat and light, trash collection, etc., you normally report your rental income and expenses on Schedule E, Part I.