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KB145
Level 1

Partial year rental loss - TT is marking as passive

Hi, 

I have two properties I am renting. One was rented for the entire year, one was rented for 137 days and was personal use before it was rented. Both properties have more expenses than income.  However, on the partial year rental instead of reflecting a loss, TT reduces my depreciation amount until my expenses are equal to my income from the unit. If I play around by changing the "fair rented days" to the entire year, the loss is not made equivalent to my income from the unit. It is only when I change it to 137 days rented that the loss disappears on Schedule E row 21.

My MAGI is below $100k.

I am an active participant.

The losses are $13k on the first unit and $3k on the partial year rental, so I am below the $25k passive loss threshold. 

 

Is this passive loss happening because it is a partial year? If so, does anyone know what IRS guidance I can review? 

 

KB

1 Best answer

Accepted Solutions
tagteam
Level 15

Partial year rental loss - TT is marking as passive

@KB145 

 

You are correct; in this instance you will have to prorate those expenses manually.

View solution in original post

3 Replies
tagteam
Level 15

Partial year rental loss - TT is marking as passive

Do not enter any personal use days for the rental that was rented for 137 days (i.e., personal use days equal 0).

 

Enter the date you placed it in service for rental use and leave the business use percentage at 100%.

KB145
Level 1

Partial year rental loss - TT is marking as passive

That definitely worked. I will have to adjust the real estate taxes, insurance premiums and so on in order for the appropriate amount to be reflected. For example, insurance should be $621/366*137 = 232 but instead it is showing $621.

 

It looks like I will have to manually update my mortgage interest and property taxes or those amounts will show up in full under depreciations and that can't be right - a portion is with the rental. Is that true, I should manually update there? Or is there something else I should do? 

 

KB

tagteam
Level 15

Partial year rental loss - TT is marking as passive

@KB145 

 

You are correct; in this instance you will have to prorate those expenses manually.

View solution in original post

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