Rental Property: Switching from "Use IRS Method" to "Use Tax Court Method." When I click on Use Tax Court Method nothing happens. It won't change. How do I do this?

[rlafave-1]

I'm on the "Allocating Interest and Taxes" page for a rental property. I can click on the Tax Court Method button but it doesn't change anything. When I leave the page and come back it's gone back to the IRS Method.  What do I do to make it change to Use the Tax Court Method?

[ColeenD3]

It may be the same number.

The Tax Court method uses the ratio of days rented divided by the number of days in the year.

The IRS method uses the ration of days rented divided by the total days used (rental days + personal days).

[rlafave-1]

Thanks for responding.  It's not the same.  Total days use was 108.  Total days rented was 99.  Plus, even after clicking on Use Tax Court Method, if I leave the page and come back to it, the Use the IRS Method is clicked.  It's like the program doesn't accept my click on the Use the Tax Court Method button.  Last year I could click on each button to see how they affected my total refund amount.  I can't do that this year.  Trying to figure out why... and how to enable it?

[ColeenD3]

Exit the program, clear cache and cookies, restart your computer and try again. I have successfully done it in the program.

[rlafave-1]

Thanks.  I've done that several times this afternoon but it still won't let me switch to "Use the Tax Court Method."  What else can I try?

[rlafave-1]

I finally got it to work!  Thanks for sticking with me until I got it

[ColeenD3]

What did you do?

[czrunner]

I have the same problem as the original poster.  Does anybody know how he/she got it work?  Perhaps the tax expert has new suggestions.  Thanks.

[TomH1959]

I have the same problem as the original poster. I am using TurboTax Premier 2024, which is supposedly optimized for rental property! When I select “Use Tax Court Method” it keeps going back to IRS method. The days rented vs personal use are different. I tried saving the file and then rebooting my computer… still cannot get “Tax Court Method” to work. How do I fix this?

[DaveF1006]

The IRS method uses the ratio of days rented divided by the total days used (rental days + personal days) ,while the tax court method uses uses the ratio of days rented divided by the number of days in the year.

If you have put a number in personal use days, try removing it to see if it will allow you to use the Tax Court method. You also might going to the Forms Mode and select Schedule E worksheet to manually adjust the days rented vs. personal use. This might bypass the issue with the automatic method selection.

[TomH1959]

I tried zero’ing out the personal days while leaving the tax court box checked. That simply did not work - it allocated all expenses to my rental property. And your second suggestion didn’t work either. 
However, I think I found the error in TurboTax (yes, an error in TurboTax!). When I check the box for using the tax court method, it correctly allocates the expense ONLY for real estate taxes. It fails to allocate all other expenses that should be differently allocated, such as insurance, maintenance, supplies, repairs, etc. 

If you work for Intuit, please report this as a software error. In addition, I request a refund of my TurboTax purchase - after all, Intuit GUARANTEES the software is correct! 

[PatriciaV]

The Tax Court allows a different allocation formula for interest and taxes (only) from the one the IRS describes in IRS Publication 527, Residential Rental Property. 

• Under the Tax Court formula, interest and taxes are allocated on a daily basis. That is, the rental portion is the ratio of days rented to the number of days in the year. 
• Under the IRS formula, interest and taxes are allocated in the ratio of days rented to days used (including personal days). 

The Tax Court ratio results in a smaller amount of interest and taxes allocated to the rental property. This allows a larger deduction for your other rental expenses. 

IRS Pub 527 Dividing Expenses mentions only the IRS method.

Additional information from the Journal of Accountancy: Vacation home rentals and the TCJA

@TomH1959 

[TomH1959]

Good grief. This explains my misunderstanding of the Tax Court method. That it applies only to interest and real estate tax is not reallly all that helpful. IMO common sense would suggest it applies to all expenses that are not solely related to rental days. But alas, our tax code is anything but common sense. 
Thanks. 

[lorhaku]

So, what I'm seeing is an error on schedule e.  When you click "tax court" it is applying to all items, not just the interest and taxes as required.  This is an error.