Vacation rental

joebisog · ‎February 14, 2026

Turbotax is allowing me a loss on a vacation rental that is used both as rental and for personal use. This seems contrary to my understanding that partial vacation rental losses can only be carried over to the next years.

What's wrong.

MindyB

In most cases, you are correct that losses on a mixed-use vacation home are limited to the amount of rental income you earned, with the excess carried over to future years. However, the software might be allowing the loss because you meet the 14-day or 10% rule: if your personal use of the home was for less than 14 days (or less than 10% of the days it was rented), the IRS treats the property primarily as a business. In that case, you can claim a loss against other income if you meet the active participation rules.

If you did use the home personally for more than 14 days or 10%, double-check your entries in the "Rental Properties" section to ensure the personal use days were entered correctly.

M-MTax

@MindyB wrote:
if your personal use of the home was for less than 14 days (or less than 10% of the days it was rented), the IRS treats the property primarily as a business.

The IRS provides for a "special allowance"; a deduction of up to $25,000 in losses if there is active participation and the owner has MAGI of less than $150,000 (the $25,000 starts to phase out at $100,000).

Further, if the rental is used for personal purposes more than 14 days or more than 10% of the days rented, which is greater, then the rental is no longer treated as a passive activity.