Schedule E

[nono4taxes]

We have a rental that we rent out and also have personal use over 14 days. When completing Schedule E, I figured out 87% of the expenses were for rental and 13% were for personal. When entering my expenses I only entered the 87% amounts. My expenses entered were more than the rental income so was not able to deduct all the total expenses. I thought the unclaimed expenses were to be carried over to next year, but I never saw a carryover amount or worksheet stating that. I just now found a worksheet that showed the difference was allocated to personal use.  Not sure why they are allocating expenses to personal use as I already had subtracted 13% of expenses before entering my info.   Can you tell me was I suppose to enter 87% of the expenses or was I suppose to enter 100% and turbo tax would divide them between rental and personal? Is there a carryover of expenses not deducted?  Thank you for any help you can give me!

[Carl]

A few things.

- If you elected to have the program "do the splits" for you, then you enter the total costs. (This it what is appears you selected, and I don't recommend that selection.)

- If you rented the property below FMRV, then that's considered personal use in some situations, and carry over deductions are not allowed.

- If the property was a vacation rental, then all personal use days during the entire 365 day year count against you, weather that personal use was while the property was classified as a vacation rental, or personal use.

[Anonymous_]

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@nono4taxes wrote:

I just now found a worksheet that showed the difference was allocated to personal use.  Not sure why they are allocating expenses to personal use as I already had subtracted 13% of expenses before entering my info.

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Is the following worksheet the one you saw? If you subtracted 13% of the expenses before entering your information and then also entered personal use days, the program split your (reduced) expenses.

You either need to enter the information manually or enter 100% of your expenses and let the program do the allocation.

[Anonymous_]

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@nono4taxes wrote:

I thought the unclaimed expenses were to be carried over to next year, but I never saw a carryover amount or worksheet....

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Expenses that exceed income on "vacation rental property" (i.e., where property is used for personal purposes more than the greater of 14 days or 10% of the number of days the property is rented at fair rental) are not carried over to the following tax year.

Any loss due to expenses that are allocated to rental use for this type of property (and which exceed income) is considered nonpassive and deducted from all other income; there is no carryover.

See Sections 469 and 280A.

[nono4taxes]

Yes this is the worksheet I found after the fact!  So I am guessing I need to go back to schedule E and enter 100% of my expenses and let turbo tax figure out the split between rental and personal.  (I had originally entered only 87% of expenses and then turbo tax split those with the 87% and 13% split).   

Since my totals on schedule E will remain the same (line 21 --  0.00)  do I have to file an amended return? 

Thank you for the help again!  

[Carl]

Since my totals on schedule E will remain the same (line 21 -- 0.00) do I have to file an amended return?

Yes, you should, as most likely entering the correct numbers will change your PAL carry overs.