Vacation Home Rental Loss Limitation Carryforward

[louisb917]

This is my first year with a Vacation Home Rental on Schedule E.  I see on a worksheet for Sch E that TurboTax is limiting my depreciation due to the Vacation Home Rental Loss Limitation.  I'm wondering where I can see the loss limitation carryforward.  In IRS Pub 527, there is a worksheet 5-1 that shows how to calculate the carryforward, but I'm not seeing the carryforward in TurboTax. I just want to make sure that it's tracked going into next year.  Thanks!

[Anonymous_]

You may very well not have a carryforward.

Check the worksheet in the publication carefully. Note the figures on Lines 3, 5 and 6d, and that you would enter the smaller of Line 5 or Line 6d on Line 6e. If Line 5 is 0, then you would have no carryforward.

[louisb917]

Agree that line 6e is zero, however keep going to Part III.  Line 7b says subtract 6e from 6d, which would not be zero, and this is the excess casualty and theft losses and depreciation to be carried over to next year.   I do believe there should be a carryforward.

[Anonymous_]

See https://www.taxprotalk.com/forums/viewtopic.php?t=2884

I am going to page @AmeliesUncle for input here. 

Regardless, note that any "loss" (on a vacation home used as a residence) would not be a passive loss that would be reported on Form 8582.

[louisb917]

Thanks, @Anonymous_!  Completely agree that this is not a passive loss carryforward. Based on everything I have been reading though, these disallowed deductions are carried forward, and hoping to find where to track these in TurboTax!

From the link you shared: "When a dwelling unit is rented and is also used personally, IRC §280A(c)(5) limits the deductions allocable to rental use to rental income, and the excess deductions are carried over to the next year."

Appreciate your help!!

[Anonymous_]

Understood and that poster also stated:

"....This carryover is NOT a passive loss. Rather, it represents excess deductions that were limited under IRC §280A(c)(5). So, when the property is sold, the excess deductions are not “released” like a suspended passive loss would be released. Rather, it looks to me like those excess deductions are lost forever."

[louisb917]

Agreed - however, I'm not worried about these losses being available when I sell the property.  I'm wanting to make sure the carryover losses are available to be used to offset higher vacation rental income in future years, which seems to be the intent of carrying these deductions forward per Part III of worksheet 5-1 on Pub 527.

[Anonymous_]

Yes, I can only tell you that TurboTax does not include Worksheet 5.1 so you will have to keep track of any carryforwards yourself, outside of TurboTax.

There is a screen in the program where you can enter nondeductible expenses from prior years.

[louisb917]

Thank you very much! I will just track this outside the system.

[AmeliesUncle · Accepted solution]

I'm pretty sure that TurboTax DOES keep track of the Vacation Home Carryovers (ProSeries does).

If you have the CD/downloaded version, you can go in the "Forms" to see the Schedule E Wks.   Below the section that shows the income and expenses are a bazilliion other things.  If you scroll about 75% down on the Schedule E Wks, I think you'll find the "Carryforward to 2024 Smart Worksheet".

[Anonymous_]

@AmeliesUncle 

You are, indeed, correct. That section of the Asset Worksheet is not in the format of the 5.1 worksheet but most certainly does have the 2024 carryforwards. Thanks for pointing this out (it really is sort of hidden in the program).

[louisb917]

Thank you both!!  I'm sorry I missed this - it was quite far down that worksheet.  Appreciate the help!!