Mixed-use rental: property taxes prorated ~75% but utilities/insurance only ~18% — why?

[TylerRoadie]

I have a mixed-use vacation rental property (275 days rented, 90 days personal use). I selected IRS rules for allocation.

Property taxes are being allocated at approximately the expected pro-rata rate (~75%), but other expenses such as utilities, insurance, and cleaning are being significantly reduced (each category, about 18% of totals).

I expected these expenses -- especially utilities and insurance -- to generally follow the same 75% rental-use ratio based on days of use.

Can you confirm:

1. Whether utilities and insurance should be allocated strictly by rental/personal days under IRS rules in my situation
2. Whether TurboTax is applying additional “vacation home” or occupancy-based limitations to these expenses
3. Whether my input method (expense entry or property classification) could be causing a more restrictive allocation than intended?

[M-MTax]

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@TylerRoadie wrote:

1. Whether my input method (expense entry or property classification) could be causing a more restrictive allocation than intended?

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That is a distinct possibility because I am not seeing any similar errors when I use your rental/personal days in a test return. You might want to check your Schedule E Worksheet and perhaps even re-enter your figures.

The likes of utilities, insurance, and general expenses incurred throughout the tax year should be allocated. However, expenses that directly relate to rental periods, or the rental use itself (e.g., management fees, commissions, some repairs, supplies) should be expensed in full if they would not have been incurred without the rental use.

[AmeliesUncle]

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@TylerRoadie wrote:

1.  
2. Whether TurboTax is applying additional “vacation home” or occupancy-based limitations to these expenses

That is my guess.

• The "Vacation Home" rules won't let you take it a loss.
• It takes certain expenses first (in your case, real estate tax).
• For the other expenses, it prorates them to bring you to zero dollars gain/loss.
  • Try deleting the insurance.  Do the utilities and cleaning increase?  If so, that is what is happening.
• The rest are carried over as "Vacation Home Carryovers".
• As a side note, is "cleaning" a 'shared' expense?  Or should that be a rental-only expense?