Vacation home only rented for 14 days this year.

[gl100]

I have rented out my vacation home to short term rentals since 2016 and filed Sch E.  2023 only rented for 14 days.  My understanding is I should delete Sch E from the 2023 return. The income and expenses are not reported.  The property taxes can be claimed on Sch A.  Assuming the the unit rents for more than 14 days in 2024, I'll have to reenter all the information about the property in the 2024 return.  I found the suspended losses and the Depreciation in the Carryforward to 2023 worksheet in the 2022 return. 

Is this the correct way to handle the 2023 taxes?

To do this I tried using Step by Step, but Sch E was still there.  I went to forms and deleted it.  Seemed to work.   

1) Will Turbo Tax know not to depreciate for the year 2023 when I reenter the property in 2024 taxes?

2) Does that depreciation number include all assets associated with the property?  Is there a listing of all assets that it is depreciating so I am sure to get everything reentered correctly?

Any insights would be appreciated.

[MarilynG1]

You could leave Schedule E in your return, since you have needed it in the past and it's much easier and clearer than having to re-enter/delete rental items.   When you report your income/expenses and rental period of 14 days for 2023, the deductions will be disallowed, but there will be record of them.  The property continues to depreciate, whether you are able to claim the depreciation or not.  

Schedule E will show the Property Tax disallowed, but with the personal portion flowing to Schedule A. 

You will have Form 4562 (landscape form), Depreciation and Amortization Report that tracks Prior Depreciation and Current Depreciation for you for the property and any related assets.

Here's more info on Renting Vacation Property.

@gl100 

[gl100]

Thank you for your reply. 

Turbotax will not allow me to file a SCH E if the rental days are listed as less than 15.  I tried making all the entries for income and expenses 0 or blank, but that did not allow the filing.  It seems that I will have to delete the schedule.

Could you please clarify your statement that the depreciation continues even if you are not able to claim it.  It seems like the 'Master's exception' means that the unit effectively was not rented, hence no depreciation happens for that year. Help me understand or if you can point to where the IRS explains it.  

Thanks  for your help.

[PatriciaV]

According to IRS Pub 527 Idle Property:

   Continue to claim a deduction for depreciation on property used in your rental activity even if it is temporarily idle (not in use). For example, if you must make repairs after a tenant moves out, you still depreciate the rental property during the time it isn’t available for rent.

In this case, either say it was rented for one rental day, but enter no income or expenses. This preserves the historical information (a work-around for TT limitations).

Note that when you indicate that the property was not rented during the year, all historical information (including Schedule E) will be deleted from your return (see screenshot below - click to enlarge). Be sure you have a copy of Schedule E and the depreciation report from last year. You will need this info if you rent the property in the future, or when you sell the property.