We have a rental property used last year 20 personal days and rented 165 days. Therefore, the property is a short term vacation property. The property is owned by an LLC and we file a partnership F1065. Form 8825 is NOT limiting the loss - instead it is allowing a net loss allocable to each partner, although the K-1 does show Property type as ‘3 Vacation / S-Term’.
However - on TurboTax 1040 program there is no where to show that this loss should be limited to zero and carried over?
so my question is - shouldn’t the loss be limited to zero either at the partnership OR 1040 level - if do - How do I accomplish this
thanks in advance
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The answer here depends upon the nature of the deductions that you reported.
Note that your personal use days, being more than the greater of 14 days or 10% of the days rented at fair value, take the rental out of being subject to Section 469 (PAL rules).
See https://www.irs.gov/publications/p527#en_US_2023_publink1000219123
Thanks for your reply!
We are reporting the usual expense for a residence. Property taxes, insurance, legal, etc. We upgraded our interior and have more depreciable assets in 2023 - which TurboTax showed as qualifying for the 80% bonus - which even after I’ve elected OUT of this expense - TurboTax is not limiting the overall loss to zero. Maybe we are allowed a net loss somehow - but I thought if a property qualifies as a vacation ST rental - any losses are not allowed and must be carried over.
am I missing the law - it is there a button in TurboTax I am not seeing? Thx
Due to the personal use number of days versus fair rental days, deductions would be limited by Section 280A, not Section 469.
As a result, there could be deductions that are strictly rental use related that would create a loss and, if so, the loss would be nonpassive.
Wow - ok great THANKS I was not fully understanding the rules. You’ve been very helpful - I will proceed!
have a great day
The following is an (admittedly crude) example of what I am referring to.
Rental income = $10,000
Commissions = $4,000
Mgmt fees = $4,000
Advertising = $4,000
The foregoing would result in a $2,000 loss and that loss would be nonpassive as all of the expenses creating the loss are related to rental use.
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