Rental property net income

[emeraldcloud]

I converted my primary residence to a rental property in 2023. My expenses are higher than my income for this property, but TT shows 'Net Income' of $0.00. I have another rental property with a positive net income of ~$6.5k for the year.  My AGI is < $150k and I file Head of Household. I actively participate in these rentals and indicated the Safe Harbor / Enterprise status for the rentals combined. 

The only reason I can think that the net income is $0.00 is that it has something to do with the partial year business use, but I can't find anything about why that would be the case. 

Any ideas or insights would be greatly appreciated!

[AmyC]

Losses are limited by the passive activity rules. and basis. You should have income for the house to be a rental. Expenses before rent are added to the basis. Perhaps something in the property profile set up is wrong. Compare your two properties to be sure both are marked the same -other than the conversion factor.  Double check pub 925 since your basis may be an issue.

[emeraldcloud]

Thanks @AmyC . I reviewed IRS Pub 925 as you suggested, and I see that there is a provision stating that the following activity is not considered passive: 

"The rental of a dwelling unit that you also used for personal purposes during the year for more than the greater of 14 days or 10% of the number of days during the year that the home was rented at a fair rental."

Based on that, it sounds like this would not be considered a passive loss, and can't be deducted from my income. Would you agree that this is the likely reason that it's not included in TT 'net income' calculation? My next question would be whether this loss may carry forward or if expenses incurred in 2023 would become part of the basis and could be depreciated in future years. 

[AmyC · Accepted solution]

Ahhh, in the property profile, you need to change some information. You converted the house to a rental unit so all expenses after it became a rental will count once you change one screen. The one that asks about personal use days actually means personal use WHILE it was a rental property and I bet that number is zero. Change that and you will get the deductions!

[emeraldcloud]

Thanks @AmyC! That did indeed solve my problem. I'm very grateful for your help!