Interest on Schedule A and Schedule E for STR

[judyh47]

If you use your vacation rental for 3 days (<14 day and 10%) and you meet requirement to split costs you can deduct on schedule E, can you take the difference in interest off your schedule A? 

Example, 3 personal days and 40 rental days.  Because of personal use I report only 93% of interest against rental income on schedule E. I assume I can report the 7% of interest on my schedule A, but I wanted to check if that is true since IRS considers < 14 days investment property vs vacation (or second) home.

[tagteam · Accepted solution]

Your figures, in terms of allocation, are correct but the 7% allocated to Schedule A (investment interest) is a miscellaneous itemized deduction which will be disallowed as a result of the TCJA (tax reform). 

Having used the property for personal purposes less than 10% of the fair rental days (and also less than 14 total days) means you did not use the property as a residence and, therefore, the interest not allocated to rental use is not considered qualified home mortgage interest. 

[judyh47]

Thank you.  

On the flip of that, I assume if I use the home 15 days and rent it 53, I can deduct 78% on schedule E and 22% on schedule A.  Is that correct?

[tagteam]

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@judyh47 wrote:

On the flip of that, I assume if I use the home 15 days and rent it 53, I can deduct 78% on schedule E and 22% on schedule A.  Is that correct?

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Yes, that would be correct.

Obviously, your itemized deductions would have to exceed your standard deduction for the interest on Schedule A to have any impact.

[judyh47]

Perfect, thank you!