Carryover of unallowed rental expenses to the next year for a dwelling unit used as a home. Where is the worksheet?

[taxguyjames]

Here is the situation:

Personal use days are more than 10% of rented days for a rental property.

Rental expenses and depreciation are more than the rental income.

According to pub 527, these expenses can be carried over to the next year according to the amount calculated in worksheet 5-1. However, there is no worksheet 5-1 produced by TT.

Will TT automatically carry over the correct amount next year? Why can't I see the amount anywhere? Shouldn't there be something like pub 527 worksheet 5-1 produced?

I can see the individual amounts on the schedule E worksheet under column (d) - Vacation Home Loss Limitation. But I can't see the total amount to be carried over to next year anywhere. 

[Critter]

Will TT automatically carry over the correct amount next year? Yes it will. 

Why can't I see the amount anywhere? The program produces a plethora of work sheets.

Shouldn't there be something like pub 527 worksheet 5-1 produced?  Between the Sch E and the Sch E worksheet all of that info is taken into consideration ... keep scrolling down on the worksheet. 

[pdaawoods]

Did you get any clearer direction on this issue?  Were you able to confirm the loss carries forward even though you don't see it anywhere besides column (d) Vacation Home Loss Limitation?

[Carl]

Personal use days are more than 10% of rented days for a rental property.

Lets get some clarification here, because you may be wrong.  Personal use days are the number of days you lived in the property as your primary residence, 2nd home, vacation home or any other "personal pleasure" use *AFTER* the property was converted to a rental. What you did with the property before it was a rental *does* *Not* *count* for anything.

 - I lived in the property for a week while I was preparing it for the next renter.

That's not personal pleasure use of any kind. It does not count as personal use days.

 - My family and I lived in the property for a week so they could enjoy the beach/lake while I was preparing it for the next renter.

That is personal use, and every day counts as a personal use day including the day you arrived and the day you departed.

Will TT automatically carry over the correct amount next year?

If you have any to carry over, then yes. It's on IRS Form 8582 as a part of  your tax return. If you have no carry overs, then that form will not be generated by the program. (this is not common, unless you are a real estate professional.)

[tagteam]

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@Carl wrote:

 - My family and I lived in the property for a week so they could enjoy the beach/lake while I was preparing it for the next renter.

That is personal use, and every day counts as a personal use day including the day you arrived and the day you departed.

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Days used for repairs and maintenance.

Any day that you spend working substantially full time repairing and maintaining (not improving) your property isn’t counted as a day of personal use. Don’t count such a day as a day of personal use even if family members use the property for recreational purposes on the same day.

See https://www.irs.gov/publications/p527#en_US_2019_publink1000219182

[pdaawoods]

I spoke with TT and they are quoting Pub 925 (pg. 5) saying that this situation isn't a passive activity and, while I don't see it stated explicitly, that you can only deduct expenses equal to income.  

HOWEVER, Pub 527 (pg. 19) acknowledges that this situation isn't a passive activity and directs you to Worksheet 5-1 to determine your carryover losses.  When I fill in the worksheet by hand, I get the carryover amount.

The problem is that TT doesn't have a Worksheet 5-1 and doesn't show anywhere on the 8582 that the loss is calculated or carried over.

[tagteam · Accepted solution]

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@pdaawoods wrote:

The problem is that TT doesn't have a Worksheet 5-1 and doesn't show anywhere on the 8582 that the loss is calculated or carried over.

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Yes, the worksheet does not appear to be supported by the program. Consequently, you need to calculate the carryover manually and then enter the figures into the program in the following screen (see screenshot) and I imagine you have to do this each tax year.

@pdaawoods 

[pdaawoods]

Thanks for the info.  Would you suggest entering this here even though this is for the current year or just figuring the numbers and holding them to enter next year?

[tagteam]

@pdaawoods I honestly do not know because entering the figures for the current year do not appear to be saved anywhere in the program. As a result, it may be necessary to keep track of the expenses outside of the program and enter them at a time when the income and expenses do not zero out.

[zxl9171]

Hi, I'm facing the same issue. How did you find the screen in your screenshot? I cannot find it so far.

[tagteam]

@zxl9171 The screen is in the Expenses section. Proceed through the screens slowly and carefully.