topic Rental Property losses in Investors & landlords

Rental Property losses

Peter Tracey — Tue, 23 Jul 2019 19:05:39 GMT

I own multiple rental properties that generate a loss because of the depreciation expense. In past years Turbotax transfered losses to Schedule C and deducted them from my other income. This year they show in the Turbotax section for this but no data is entered in to schedule C other than business name and type. No revenues or expenses appear so I do not get the benefit I did previous years. Is this because of the new tax law or am I doing something wrong?

Re: Rental Property losses

Anonymous_ — Tue, 23 Jul 2019 20:23:01 GMT

Why are you expecting (or have been expecting) data to be transferred to Schedule C for rental property? Is the property residential rental property or something else?

Typically, unless you are a dealer in real estate or provide substantial services, income/expenses from rental real estate is entered and reported on Schedule E - depreciation deductions would appear on Schedule E as well.

Re: Rental Property losses

Critter — Tue, 23 Jul 2019 23:02:04 GMT

The program cannot and will not transfer any thing from one section of the return to another ... so it could not have moved the rental income/loss from the Sch E to anywhere else on the return... only you can do that with much effort. So are you really saying the loss from the rental is being used against other income on the return ?

Re: Rental Property losses

Peter Tracey — Wed, 24 Jul 2019 15:25:50 GMT

My original question had an error as you pointed out - the data goes on Schedule E not Schedule C.

I am a professional Real Estate under IRS standards and have filed as such for over ten years. I have used Turbotax during that time without problem.

In 2017 I input the revenue and expense data into the Turbotax section for rental properties. The asset basis was there from previous years and Turbo tax added the depreciation expense. This data ends up on Schedule E with a loss on Line 22. This loss appeared on my Form 1040 on line 17 and reduced my income.

In 2018 the same entries produced a loss on Schedule E Line H1. This then was transfered to a Form "Qualified Business Income Deduction Summary". The loss appears on this Form but is followed by a calculation that ignores it and calculates income from REIT and the tax due on this income . It is this number that transfers to Line 9 on Form 1040.

There is no longer any benefit from the Business Loss?

Re: Rental Property losses

alankoerber — Thu, 23 Jan 2020 22:00:17 GMT

I've got the same question....no business loss? Is this a change 2019?

Re: Rental Property losses

BarbaraW22 — Fri, 24 Jan 2020 18:40:05 GMT

No, the requirements for deducting rental property losses have not changed.

Please review the requirements for reporting losses from rental activities below. If you qualify as an active participant or a real estate professional, you should review your entries in TurboTax to make sure you answered all the questions correctly. Please follow these steps to check your entries:

Log into TurboTax and click on any topic to continue
Click on Federal from the menu on the left-hand side of the screen and then click on Wages & Income at the top
Scroll down to “Rental, Royalties, and Farm,” click on “Show More,” then click on “Start” or “Revisit” to the right of “Rental Properties and Royalties,” and then click “Yes”
Carefully answer all the questions considering the definitions for an active participant and a real estate professional listed below.

Per IRS Publication 525, losses from rental activities for the tax year are not allowed unless you are one of the following:

An "active participant" in the rental activity

A "real estate professional"

You are considered an active participant in your rental activity if you make management decisions such as approving new tenants, deciding on rental terms, approving expenses and other management decisions. In addition, your interest in the rental activity must be at least 10% of the value of all interests in the activity throughout the year.

If you are an active participant in your rental activity, you can deduct up to $25,000 of your rental activity losses from your non-passive income. However, if your modified adjusted gross income exceeds $150,000, you are not eligible for the deduction.

You are considered a real estate professional if over half of the personal services you performed in all trades or businesses during the tax year were performed in real property trades or businesses in which you materially participated. In addition, you must spend more than 750 hours, during the tax year, working in real property trades or businesses in which you materially participated.

If you qualify as a real estate professional, then the rental activities in which you materially participated are not considered passive activities.

Please see IRS Publication 925 for more information.

@alankoerber

Re: Rental Property losses

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Re: Rental Property losses

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Re: Rental Property losses

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Re: Rental Property losses

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Re: Rental Property losses

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