Hi All,
I am trying to prepare for taxes for 2024. I am new to rental property (and what may be a unique situation), and I wanted to get advice (can't find what I am looking for in Publication 527). Specifics are below:
*Mother-In-Law Died on 3/15/23
*MIL, wife and I were on the deed (so, she owned 50%, we owned 50%) ... but we paid the mortgage.
*We were left the remainder of the home in the will
*We decided to rent and not sell with a conversion date (when we started to convert to rental) on 7/1
*The home was first available for rent on 10/1 (we live in NC and the rental is in FL, so a long maintenance process)
*First renter was 10/31 for 31 days and second was 12/30 for 2 days (this year's total 33 days)
*Total days available to rent but not rented were 59
*My MIL lived in the house (used as her main home) from 1/1 until death (3/15)
*My wife and I and my brother-in-law/sister-in-law used the house until the end of June (for funeral / estate planning purposes)
*Other than one week in July and one week in August (each of which we used for maintenance ... i.e. not personal), no one use the house.
So, in summary, if I understand correctly:
Conversion Date = 07/01 (for expenses / depreciation)
In-Service Date = 10/01
Days used for personal = 181 (between MIL and family - until conversation date)
Days used as rental = 33
Days available for rental but not used 59
Business Use = 100% (since no personal use after conversion)
Other than to confirm the above, my main question is expenses. If I fill out form "schedule E" from the IRS website, it asked about rental expenses. In that form (if I understand correctly), I would enter expenses from 7/1). However, in Turbo tax, when I enter rental expenses, it enters a percentage of the expenses (based on rental use divided by personal use + rental use = 33/214 my case) on schedule E ... not the full expense ( which is only 10.4%). So, IRS Schedule E, if I enter $2000 for utility, I get $2000. If I enter $2000 for utility in TurboTax, I get $208 or 10.4% x 2000. Questions:
(1) why does turbo tax use the multiplier while the IRS form doesn't seem to (Schedule E has the tax payer enter the numbers, but doesn't use them in calculations)?
(2) Since TurboTax uses the multiplier, I am supposed to enter expenses of the property for the full year (as opposed to just from the conversion date?
Sorry for the long post, and I appreciate advice / help that you can give.
