Schedule E for a partial-year rental property: how to force TurboTax to allocate 100% of expenses to rental (and none to personal use)

[petusky]

I submitted this question 6 days ago but apparently it has already been archived.  (the original was https://ttlc.intuit.com/questions/4690349)  So, I'm reposting :

I rented my house in 2018 for the first time.  It is a single family unit that I converted to a rental part way through the year. I want to deduct expenses associated with the rental.

Turbotax automatically allocates a pro-rata portion of certain rental expenses to a part-year rental, based on personal/rental use.  For example, if I used the house for 90 days (personal use) and rented 270 days (rental), then turbotax allocates 75% of my expenses to my rental.  That makes sense for interest, taxes, and insurance.  However,  it also takes the maintenance and repair expenses I enter, and also then only deducts 75% of what I enter.  I don't want it to do that!  For example, if I incurred $1000 of maintenance expenses for my rental, and I enter that in TurboTax, it only reports $750 as rental expense.  How can I override TurboTax's default behavior for schedule E expenses for categories like maintenance and repairs, so that it doesn't only report 75% of those categories---while still deducting only a pro-rata share of things like interest and taxes. 

[CherylW]

Go through the Rental section again.  On the page shown below, check the two boxes that I've circled (don't pay attention to the actual check marks).

The next screen (below) asks Was this Property Rented for All of 2018?, check Yes., and Yes to rented at a fair rental price.

Then select Yes, I am an active participant...

Continue through the next questions, including the one about how you'd like to enter the info:  type it in yourself.

Continue till you get to the third screen below, and check Yes to Was this property your residence in the past?  Choose how you acquired it.  

Walk through the rest of the interview and it'll let you allocate your expenses appropriately.

[petusky]

This is what I already selected.  It doesn't work.  Is there no other solution?

[CherylW]

at what point does it start not working?

[petusky]

It asks me to enter the expense data, but when I look on the computed schedule E, it allocates only a prorata share.  For example, I type in $1000, but only $663 shows up (based on my allocation of days between rental, personal, etc.)

[Zbucklyo]

(delete)

[petusky]

BTW: Admittedly, I can't find the "tell us about the property" again.  Presumably I answered that on the first time through, but it's not showing that page again.

[CherylW]

Go all the way to the beginning and then go back in, you'll be able to find it if you go all the way back:

1.  Click Federal Taxes across the top.

2.  Click Wages & Income across the top.

3.  Click I’ll choose what I work on.

4.  Scroll down to Rental Properties and Royalties.

5.  Click Start or Update by Rental Properties and Royalties (Sch E).

[petusky]

At step 5 this breaks down.  Instead of what you have I see "Income from Rentals or Royalty Property you Own".  I can click "Yes", and after a screen about not being a real estate professional, it takes me to "Rental and Royalty Summary".  

[CherylW]

Click Edit by the one that you want to change.

Click Update to the right of Property Profile.

A few screens into the interview, you'll be able to change the rental periods and days rented, as above.

[petusky]

Changing the days rented totally messes up all the calculations.  For example it then applies my entire interest deduction to the rental property.  But that is not valid---it was personal use for the first part of the year.  And it makes a difference in calculations because it leads to a loss in the rental and also helps me avoid reaching the max interest deduction in the personal interest deduction.  All invalid.

[Zbucklyo]

There is a way you can fix this, but it involves more work, which is for you to manually calculate the items that apply both to the property as a personal residence and a rental property - property taxes, mortgage interest on the personal side, and those two plus insurance, maintenance and repairs, depreciation on the rental side.

You deduct property taxes and mortgage interest on Schedule A for the period of time in which the property was a personal residence.  When you set up the rental, make sure you say that it is 100% rented - because that is accurate for the time after it was converted to a rental.  Then, enter property taxes, mortgage interest, insurance, repairs and maintenance, etc. for the time it was a rental.

[CherylW]

thanks for clarifying Zbucklyo.