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mikrav
Level 2

Schedule E error - days personal use cannot be more than zero

I rent out part of my house (30%) as a AirBNB - last year, it was rented for 44 days.  The remainder of the time I use that portion of the house (and I DO use it, it is not sitting vacant) for personal reasons.  I put in this split in order to appropriately prorate my taxes/interest, etc and those numbers all looked correct to me.  However, when going to submit I get the following error: "Days personal use cannot be more than zero.  You indicated that this is an owner-occupied rental property."  If I change the days personal use to zero, than it attempts to deduct a full 30% of my mortgage interest and property taxes as rental expenses, even though the rental portion of the house was not rented out the entire year.

 

Help!

8 Replies
AmeliesUncle
Level 13

Schedule E error - days personal use cannot be more than zero

There are two splits involved: One for the 30% portion of the house and one for the 44 days.  The program can NOT do both splits, so you need to manually do some calculations.

 

I think I would treat the 30% as a separate property.  Don't say you rented part of you home, tell the program it is a completely separate property.   You manually calculate the first split, and will enter 30% of all of your shared expenses (mortgage, taxes, insurance, utilities, etc.).  Then enter the 44 days and the number of your personal days, and the program will do the second split.

 

 

mikrav
Level 2

Schedule E error - days personal use cannot be more than zero

That's exactly what I've been doing, but it won't let me put in the personal days at all.  It'll do the calculation initially (and correctly) but then will flag it as an error on the final check and tell me personal days has to be zero (which is not correct).  This is the first year I've had this issue.

AmeliesUncle
Level 13

Schedule E error - days personal use cannot be more than zero

And you are only entering 44 rental days, right?

 

You might want to review all of the questions again, starting from the beginning of the rental section.  I suspect that somewhere you might have indicated you are living in the property, or renting part of your home, or something like that.

 

Otherwise, it might just be a program error.  It is still early in the tax season, and there are numerous errors in the program.   So waiting a few weeks for them to fix it could be the solution.

Carl
Level 15

Schedule E error - days personal use cannot be more than zero

Here's where I see people mess this up the most.

Period of time the property was classified as a rental - 44 days.

Number of days of personal use *WHILE* *IT* *WAS* *CLASSIFIED* *AS* *A* *RENTAL*

The days of personal use would be ***ZERO***

 

mikrav
Level 2

Schedule E error - days personal use cannot be more than zero

If I put in zero, however, it does not appropriately portion out the expenses - it tries to portion the full 30% of mortgage interest, for example.  Every tax guidance I have read states that expenses such as property taxes need to be multiplied by BOTH the portion of the house classified as a rental (30%) AND the proportion of days in the year it is actually occupied (44/366).  It is this calculation that TurboTax is not allowing me to do.

Carl
Level 15

Schedule E error - days personal use cannot be more than zero

I think you are mis-interpreting the TTX screens. I lost count of how many times I've seen it over the years. I'll need to "walk you through it" from start to finish. So on the "Rental and Royalty Summary" screen, delete the entry entirely and lets start from scratch.

- Click the "Add another rental or royalty" button.

- Fill in the data on the "is this a rental property or royalty?" screen and continue.

- Select "single family home" and continue.

- Now select all of the following:

*2020 was the first year I rented this property

*I rent out part of my home

*I converted this property from personal use to a rental in 2020

*I converted this property from a rental to personal use in 2020

- Click continue. this puts you on the "Converting your home to a rental" screen. Read this screen. It clearly states that it will be asking you for expenses incurred *while it was a rental*. Click continue.

- Select NO, this property was not rented all year. Then for days rented enter 44.

- For days of personal use enter 0 (ZERO)

- Select NO I do not have a home office, and continue.

- Select YES I will enter total amounts and let TurboTax do the math.

- For rental use percentage, enter the percentage of floor space in your house that is exclusive to the renter. (I'm picking 25% for my fictitious scenario here.)

- click continue.

- Select YES I am an active participant.... and continue.

- Select NO, 1099 not required, and continue.

- Select enter rental info myself, and continue.

- Select none of the the above, and continue.

At this point you're on the rental property summary screen for this specific property.

- Elect to start/update the Assets/Depreciation section.

- "Do you have assets for this property that can be depreciated?" select YES and continue.

- "Did you buy items that cost less than $2,500 in 2020?" Select NO and continue.

- "Did you make improvements in 2020?" Select NO and continue.

- Select "Rental Real Estate Property" and continue.

- Select "Residential Rental Real Estate" and continue.

- In the "Tell us about this rental asset" screen, enter a name for this asset (such as "my home")

- Enter what you paid for the property in it's entirety when you "originally" purchased it.

- Enter what portion of what you paid for the property (portion of amount entered above) was for the land.

- Enter the date you "originally" purchased the property.

- Click continue.

- Select "purchased new" and "Yes, I've always used this item 100% of the time for business"

- Enter the date that you first started using it for business. I"m using July 1 2020 in my fictitious scenario.

- Click Continue.

- You're not done yet. On the Asset Summary screen click continue.

- Now click the Edit button next to the entry you just made.

- Click the Continue button 3 times. That should put you on the "Tell us more about this rental asset" screen.

- select "I purchased this asset new" and also select "This item was sold, retired, stolen, destroyed, converted to personal use....."

- For the "date you sold/retired it from use" enter 44 days after the date you first started using it in this business. (It's at the bottom of the screen). For my fictitious scenario, that date would be Aug 14 2020.

- On this screen you currently have selected "Yes, I've always used this item 100% of the time for this business".  Change it to "No, I have not always used this item 100% of the time for this business"

- Select "I used this item for personal purposes before I started using it in this business"

- In the box for "percentage of time I used this item for this business in 2020" it currently reads 100%. 44 days is 12.05 percent. So change that number to 12.05.

- Click continue.

- Now you're on the "Special Handling Required?" screen. You absolutely MUST click YES on this screen. Please do so.

- You're now back to the "Your Property Assets" screen. The depreciation amount is correct now.

With my scenario, the math for the property taxes will work like this. Plug in your actual numbers.

 

Total property taxes paid in 2020 = $10,000

Multiply $10,000 by the percentage of floor space rented out (25% in my scenario)

10,000 X .25 = $2,500

Now multiply $2,500 by the percentage of time the property was classified as a rental in 2020. For my scenario that's 12.05%

$2,500 X .1205 = $301.25

The IRS rounds to the nearest dollar. So that's $301 in property taxes I can claim on SCH E, the remaining $9.699 is a SCH A itemized deduction.

Use the same math for property insurance, keeping in mind that there is no SCH A deduction for the property property insurance.

 

JillianDBK
Returning Member

Schedule E error - days personal use cannot be more than zero

Ok- this is super helpful for my own situation....BUT....

1 - why do I say I bought it new?  it is a house. It was not new when I bought it.

2 - why do I say I have always used this 100% of the time for business? I converted part of my house to airbnb so before I started renting it out I was using that part for personal use. 

 

Carl
Level 15

Schedule E error - days personal use cannot be more than zero

1 - why do I say I bought it new? it is a house. It was not new when I bought it.

Basically, because that's the way the program is designed, and the IRS says so. The property is new to "YOU".

2 - why do I say I have always used this 100% of the time for business? I converted part of my house to airbnb so before I started renting it out I was using that part for personal use.

You are confusing space with time.

You may have converted 20% of your floor space to rental property on 7/1/2020 for example. That's 20% of your floor space for 50% of the year.

But, from the date you converted that space to business use (7/1/2020) it was one hundred percent business use, provided you did not use that space for any personal use between 7/1/2020 and 12/31/2020.

 

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