Should I enter the full amount in rental expense or the prorated amount for a rental that I used also for personal use?
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abulos
New Member

Should I enter the full amount in rental expense or the prorated amount for a rental that I used also for personal use?

 
7 Replies
Coleen3
Intuit Alumni

Should I enter the full amount in rental expense or the prorated amount for a rental that I used also for personal use?

You must prorate. There is no deduction for time spent using the property for personal use. 

There are three scenarios. One is that you were living in the home as a personal primary residence and converted to rental use. In this example, you would begin taking expenses on the date it was placed in service. You place property in service in a rental activity when it is ready and available for a specific use in that activity.

The second is vacation home. Here, you intermittently use the home for personal use when it is not being rented.

https://www.irs.gov/taxtopics/tc415.html

The third is a not-for-profit rental. You rent it for less than you could on the open market.

https://www.irs.gov/taxtopics/tc415.html

abulos
New Member

Should I enter the full amount in rental expense or the prorated amount for a rental that I used also for personal use?

thank you for the quick response... on the TT software it calculates amount rented vs personal use.  This I am assuming is the prorated factor. So  the expenses entered such as maintenance automatically gets calculated with the proration factor?   Or ...  should I use this ratio to factor in my expenses in the fields.  I notice if I select full time rental VS.  partial rental TT  changes my tax numbers.
Just need more clarification on how the software is set up.
Coleen3
Intuit Alumni

Should I enter the full amount in rental expense or the prorated amount for a rental that I used also for personal use?

I'm confused. Which scenario? Conversion or vacation home?
abulos
New Member

Should I enter the full amount in rental expense or the prorated amount for a rental that I used also for personal use?

It is an Airbnb situation . My home ..rent entire house periodically to Airbnb guests. Not a conversion. Does the software automatically prorate the expenses given the question of days rented vs days of personal use . Thank you 🙂
Coleen3
Intuit Alumni

Should I enter the full amount in rental expense or the prorated amount for a rental that I used also for personal use?

Yes.  Make sure to select vacation home on "What type of rental is this?".
abulos
New Member

Should I enter the full amount in rental expense or the prorated amount for a rental that I used also for personal use?

Just to be clear I use the full amount of expenses IE:  mortgage interest, home insurance, taxes. The software will adjust the deduction with the prorated calculation.  Subsequently, would I then reduce the amount of deduction with the prorated factor when I claim it on my personal deduction.  again thank you for your time.
Coleen3
Intuit Alumni

Should I enter the full amount in rental expense or the prorated amount for a rental that I used also for personal use?

Yes, but make sure, as I said above to choose vacation home and put in the number of days personal use and rental use.

Topic 415 - Renting Residential and Vacation Property
If you receive rental income for the use of a dwelling unit, such as a house or an apartment, you may deduct certain expenses. These expenses, which may include mortgage interest, real estate taxes, casualty losses, maintenance, utilities, insurance, and depreciation, will reduce the amount of rental income that's subject to tax. You'll generally report such income and expenses on Form 1040 (PDF), U.S. Individual Income Tax Return, and on Form 1040, Schedule E (PDF), Supplemental Income and Loss. If you're renting to make a profit and don't use the dwelling unit as a residence, then your deductible rental expenses may be more than your gross rental income. Your rental losses, however, generally will be limited by the "at-risk" rules and/or the passive activity loss rules. For information on these limits, refer to Publication 925, Passive Activities and At-Risk Rules.

If you rent a dwelling unit to others that you also use as a residence, limitations may apply to the rental expenses you can deduct. You're considered to use a dwelling unit as a residence if you use it for personal purposes during the tax year for more than the greater of:
1. 14 days, or
2. 10% of the total days you rent it to others at a fair rental price.
It's possible that you'll use more than one dwelling unit as a residence during the year. For example, if you live in your main home for 11 months, your home is a dwelling unit used as a residence. If you live in your vacation home for the other 30 days of the year, your vacation home is also a dwelling unit used as a residence unless you rent your vacation home to others at a fair rental value for 300 or more days during the year.

A day of personal use of a dwelling unit is any day that it's used by:
• You or any other person who has an interest in it, unless you rent your interest to another owner as his or her main home and the other owner pays a fair rental price under a shared equity financing agreement
• A member of your family or of a family of any other person who has an interest in it, unless the family member uses it as his or her main home and pays a fair rental price
• Anyone under an agreement that lets you use some other dwelling unit
• Anyone at less than fair rental price

If you use the dwelling unit for both rental and personal purposes, you generally must divide your total expenses between the rental use and the personal use based on the number of days used for each purpose. You won't be able to deduct your rental expense in excess of the gross rental income limitation (your gross rental income less the rental portion of mortgage interest, real estate taxes, and casualty losses, and rental expenses like realtors' fees and advertising costs). However, you may be able to carry forward some of these rental expenses to the next year, subject to the gross rental income limitation for that year. If you itemize your deductions on Form 1040, Schedule A (PDF), Itemized Deductions, you may still be able to deduct your personal portion of mortgage interest, property taxes, and casualty losses on that schedule.

There's a special rule if you use a dwelling unit as a residence and rent it for fewer than 15 days. In this case, don't report any of the rental income and don't deduct any expenses as rental expenses.
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