What is the correct way to enter rental income on a home you own? Should all rent be included...

[bjmt]

Ok sorry @Carl but this has got me confused again.

I will readjust cost back to original cost minus prior years depreciation.

As outlined previously, there WAS personal use *after* I converted it back to rental. Rental restarted in May 2022 but ended Oct 2022. It was back to primary residence in November and Dec 2022. Does this change anything?

Date purchased or acquired: 09/02/2015

Date I started using it in this business: 10/01/2015

Percentage of time I used this item for this business in 2022 (e.g., 80%): 100.00

Where am I inputting "in service date"? Again, the expenses in Turbotax in Schedule E has been reflected as 50% of everything (and 50% for mortgage interest and property taxes in Deductions and Credits). Both sections were calculated by TurboTax once I input the full amounts under EXPENSES / ASSETS (DEPRECIATION).

[Carl]

As outlined previously, there WAS personal use *after* I converted it back to rental. Rental restarted in May 2022 but ended Oct 2022. It was back to primary residence in November and Dec 2022. Does this change anything?

Nope, there is no personal use. You state, ".... ended Onc 2022". So it's my understanding that you converted it back to personal "BEFORE" you moved back in and made it your primary residence. So during the time the property was your primary residence, it was *NOT* classified as a rental.

Or am I the one not understanding?

I know this gets aggravating for both of us. But better us, than you and the IRS.

[bjmt]

Thank you, @Carl . Yes, I agree better us.

What constitutes it being classified as a rental? If it is me actively listing/advertising it.as a rental, then it was only listed in April 2022. And once it got rented in May 2022, no more listing was needed as the lease ended in October 2022 and I moved back in November 2022. 

Do the dates I input for 2015 make sense? Or should I be seeing "in service dates" somewhere where I should be clarifying the 2022 rental dates?

[Carl]

What constitutes it being classified as a rental?

Back in 2015 on your 2015 tax return when you initially set up the property for the very first time, you indicated in the TurboTax 2015 program that you converted the property from personal use, to rental. The program asked you for the date of the conversion. You would have entered a date of 10/1/2015 or before. Now if you moved out of the house in Sept and started advertising it in Sept, then your conversion date/in-service date would have been anytime between one day after the day you moved out, and 10/1/2015.  So for the period of time in 2015 while it was classified as a rental, it was 100% business use.

Five years later when doing your taxes in TurboTax 2020 (the year you moved back in to the property as your primary residence) you would have selected the option to indicate "I converted this property from rental to personal use" and would have entered a conversion date of any time between one day after the last renter moved out, and the day you moved in. For that period it was classified as a rental in 2020 (Jan-Apr) the property was 100% business use.

 In 2022, property was converted back to a rental in May 2022 and back to a primary residence in Nov 2022.

Wait a minute! You converted the property from personal to rental, and then from rental to personal in the same tax year? If so, this "should" have caught my eye from the beginning. That changes everything. I did read back through this thread and it looks like I missed that. Just making sure you didn't make a typo.

[bjmt]

Yes, @Carl that's what I have been reiterating.

Jan-Apr 2022: primary residence

May-Oct 2022: rental

Nov-Dec 2022: primary residence

In 2022, it was first primary residence, then a rental, then BACK to primary residence.

Please advise how this changes:

Percentage used for for this business in 2022

Date it was used for this business 

Depreciation capture

Cost basis 

Expenses

Deductions and credits

[Carl]

For 2022, since the property was classified as a rental for less than a year, and the classification did not cross tax years, you are not required to depreciate the property. (You can if you want. But it's not required.) You also don't have to report it on SCH E. (Again, you can if you want. But it's not required). All that's required at a minimum, is that you report the rental income as "other income". Doing so means you can't claim/deduct any rental expenses of course. Would you rather do this? Or continue pursuing the SCH E?

[bjmt]

Glad we are on the same page now, @Carl . Sounds like my original inputs were right. Going to keep Schedule E and claim rental expenses. If I want to skip depreciation, am I just skipping the "Assets" section in the EXPENSES / ASSETS (DEPRECIATION) under Rental Property Info? And if I want to keep the depreciation, can you confirm the below.

COST- can you confirm if I still need to back out prior year depreciation from cost?

Percentage of time I used this item for this business in 2022 (e.g., 80%): - can you confirm if this should be 50%?

Selections made:

• No, I have not always used this item 100% of the time for this business.
• I first used this item at least part of the time for this business, and also used it for personal purposes.

Date I started using it in this business: 10/1/2015

[Carl]

If you're using SCH E and just not depreciating, that means Assets/Depreciation should be blank.

Percentage of time I used this item for this business in 2022 (e.g., 80%): - can you confirm if this should be 50%?

Nope. Still 100% from the in service/conversion date.

• No, I have not always used this item 100% of the time for this business.

Yes, it was used 100% for business between the conversion dates.

• I first used this item at least part of the time for this business, and also used it for personal purposes.

This question isn't asked when you've got 100% business use.

Date I started using it in this business: 10/1/2015

Nope. The date you converted it to rental in 2022. I think that was April 2022 after you moved out.

All rental expenses are 100% deductible (since you're reporting on SCH E) and you only enter those expenses incurred during the time it was a rental. Because you converted to rental and back to personal use in the same tax year, you may have to manually pro-rate the mortgage interest and property taxes. Not sure on that. But I suggest you do so anyway and do not select the option to let the program do it for you. Regardless, you will definitely have to pro-rate the property insurance. All other rental expenses are 100% deductible on the SCH E, as you only enter those incurred while the property was classified as a rental.

[bjmt]

Please see attached screenshots. These are the set of questions I get depending on which radio button I click on. The statement is "Yes, I've always used this item 100% of the time for this business" (since I acquired it). This is not true. 

If I click on "I used this item for personal purposes before I started it in this business", it will not let me use 100% for Percentage of time I used this item for this business in 2022.

Given the confusion, I have deled the assets/depreciation part. Turbotax is still only allocating 50% of my total expenses (Real estate taxes, Insurance premiums, Repairs, Cleaning/maintenance, Mortgage interest) in Schedule E under Expenses and 50% (of Mortgage Interest and Real Estate Taxes) in Deductions & Credits.

Thank you, @Carl for all your help. Filing my retun now.