topic Rental Property loss deduction in Deductions & credits

Rental Property loss deduction

marshalllangfeld — Tue, 30 Mar 2021 16:23:59 GMT

I have a loss on a vacation rental property for 2020. My AGI is over $150,000. For some reason Turbo Tax is allowing me to deduct the loss, which I thought was not allowed. My other income is from wages, interest, dividends and a fee for serving as a director on a board. Shouldn't my loss be carried over and not deductible in 2020?

Re: Rental Property loss deduction

JohnW152 — Tue, 30 Mar 2021 17:15:13 GMT

Please clarify – did you possibly indicate that you were a real estate professional in the TurboTax interview?

If you did, you wouldn’t be subject to the normal passive activity loss limitations.

Re: Rental Property loss deduction

marshalllangfeld — Tue, 30 Mar 2021 20:58:10 GMT

I answered "no" to the question on whether I was a real estate professional. I answered yes to the question on whether I actively managed the property as I own 100% of it and make all decisions on rentals, repairs, etc.

Re: Rental Property loss deduction

DawnC — Tue, 30 Mar 2021 22:13:35 GMT

Is it deducting the full amount of the loss and how much of a loss is showing up? You did not indicate you sold the property anywhere, did you? And is all of your income entered? If your AGI is what you say and you did not sell the property, the loss should be carried over. Look on Schedule E; what is on Line 22? Line 26? The Schedule E worksheet may show what the issue is. What boxes (A-M) are checked?

Re: Rental Property loss deduction

marshalllangfeld — Wed, 31 Mar 2021 00:08:13 GMT

The full amount of the loss is being deducted and the property was not indicated as sold. All of my income has been entered. Line 22 and 26 on Schedule E both show the full loss. On the E Worksheet, the boxes that are checked are B, C and G. I am not sure why/how G is checked. The "No" box is indicated on I through M. On Form 8582, I have other passive losses from minority investments in real estate LLC's but the vacation rental loss does not appear on the worksheet or on 1 a-d (Rental Real Estate Activities with Active Participation).

Re: Rental Property loss deduction

AmyC — Wed, 31 Mar 2021 18:41:06 GMT

Box G is the issue. The program will automatically check this box if the personal use of the property is more than the greater of 10% of days rented at fair rental value or 14 days. Check this box if there are other exceptions that make this NOT a passive activity. See the IRS Instructions for Form 8582, Passive Activity Loss Limitations, and Publication 925, Passive Activity and At-Risk Rules, for details on when the rental of property is not considered to be a passive activity

Days spent working on the property are not considered personal use days. Review your answers in the program for personal use vs rental time.