Where do I deduct expenses like linens, toilet paper, curtains, decorations, shampoo, sofa, bed, tables?

[susanoday]

I'm filling out Schedule E for the first time for a vacation rental. Very confused as to where to put different expenses. Does furniture go under assets that are depreciated? What about all the things I bought to decorate the rental with? What about sheets and towels and bedspreads. Also, toilet paper, paper towels, gifts for guests. Is there somewhere I can find this information? I need specific information about what category these go in on Schedule E. Thanks to anyone who can help.

[DDollar · Accepted solution]

Furniture is an asset. You can set up all of your furniture as a single asset, or you enter them individually.  Any item with a cost less than $2,500 can be expensed.  Things you bought to decorate with I would include with Other. Sheets, towels, linens, paper products, etc. would be supplies.  You can use Other for anything that doesn't fit somewhere else. There aren't a lot of Schedule E categories to choose from.  More important that the categories is maintaining good records. 

Following is a link to Schedule E, the tax form which all of these items flow to.  This should help you see what the end categories are. https://www.irs.gov/pub/irs-prior/f1040se--2018.pdf

[susanoday]

Thank you so very much. It is perplexing why the information you gave me wasn't easier to find. It seems like others would have similar questions with a new vacation rental. Thanks again!

[DDollar]

You're welcome.  Thanks for using TurboTax!!

[Laima]

@DDollar 

That is super helpful!

Just to clarify - is anything else under $2500 is an expense or does it include furniture under this amount? Would things like light fixtures, security cameras, TV, etc would also fall under the assets even if it's under $2500?

[JohnB5677]

Yes, all of the items you have identified can be expensed if they cost less than $2,500.  However, you do have the option to depreciate any or all of them as assets if you choose to.

[Aidenross]

Filling out Schedule E for the first time can definitely feel overwhelming, but breaking it down helps!

For your vacation rental expenses, here’s how they typically fit:

• Furniture (sofa, bed, tables, etc.) → These are assets and should be depreciated over time. The IRS has specific guidelines on how many years each type of furniture is depreciated.

• Decorations (curtains, wall art, etc.) → These can also be depreciated if they are significant expenses, but small decorative items might fall under supplies or miscellaneous expenses.

• Linens (sheets, towels, bedspreads, etc.) → These are typically supplies and can be deducted in the year purchased.

• Toiletries & Consumables (toilet paper, paper towels, guest gifts, shampoo, etc.) → These are operating expenses, as they are used up quickly and need to be replenished.

For a complete breakdown, the IRS Schedule E instructions provide specific details. Also, checking with a tax professional can ensure you're categorizing everything correctly.

By the way, if you’re looking for quality home essentials like linens, covers, and decorations, www.ozsupermart.com.au has some great options. Hope this helps—good luck with your filing!

[susanoday]

Hi and thank you - I don't see "operating expenses" on schedule E. Could you be more specific? Thanks so much!

[AnnetteB6]

There is not a specific category for 'operating expenses' on Schedule E.  All of the separate categories of expenses are considered to be operating expenses for a rental property.  This includes things like utilities, insurance, property tax, mortgage interest, management fees, advertising, and the list goes on.

As you go through the entries in TurboTax for Rental Income and Expenses, the separate categories are broken down for you to enter.  There is even a separate 'miscellaneous' category where you can enter an expense that was not covered in one of the other sections.  

Take a look at the following TurboTax help article to learn more:

What kinds of rental property expenses can I deduct?

@susanoday