What expenses can we deduct for not-for-profit rental income of my personal residence on Schedule A, line 23? The not for profit rental income was entered on line 21 of 1040.

[matt-cox]

We understand expenses are subject to the 2% of AGI.

[PaulaM]

The IRS link below states that you can deduct not-for-profit rental expenses up to the amount of rental income. You cannot deduct a loss or carry forward to the next year any rental expenses that are more than your rental income for the year. And yes, the expenses are deducted as a miscellaneous expense subject to the 2% rule.

The publication doesn't go in to any details regarding what kind of expenses you can deduct. These would be any expenses that your incurred in order to collect the income. Deduct mortgage interest and property taxes in the Your Home section. They won't be subject to the 2% rule.

The expenses would be similar to the expenses that are deducted on for-profit rental. Some example of expense categories would be: 

• Advertising
• Cleaning/Maintenance
• Insurance (a proportionate share)
• Repairs
• Supplies
• Utilities 

https://www.irs.gov/publications/p527/ch04.html#en_US_2016_publink1000219164

https://www.irs.gov/pub/irs-pdf/p527.pdf

[geezma101211]

What did the tax expert mean by the 2% rule?

[PattiF]

The 2% rule refers to a deduction on Schedule A that allows deduction of miscellaneous itemized deductions that are greater than 2% of the AGI. This is no longer in effect, This has been suspended in tax years 2018 through 2025.

The above answers were from past years and archived in 2019. This no longer applies to a not-for-profit rental.

[BekaD3]

Where in the software would we enter that into? I see the Other Deductions and Credits section and then the Other Deductible Expenses. Where would it be in there?

[KrisD15]

If you are still asking about not-for-profit rentals, which is the subject of this thread, most expenses cannot be claimed. 

This thread started for Tax Year 2018, but tax law has changed since then. 

Expenses relating to the "Not-for-profit" rental, such as property tax, may be added to your Itemized Deductions, the same as all property tax paid. But there is NOT a place for the expenses specific to the not-for-profit.

If you use the Standard Deduction, increasing Itemized Deductions will not matter on your return. 

There was a time that a Taxpayer could report the expenses as "Miscellaneous Deductions" however that deduction was eliminated at least through tax Year 2025.

See Page 7 of Pub 535