I saw this from the forumYou are not allowed to take losses on a rental property that has a mixture of personal and business use. if you use it for personal purposes more than the greater of:14 days, or10% of the total days it is rented to others at a fair rental price.My questions isWill the losses be carried over to the next year in this scenario?If so, how TurboTax handle it?If not, where will the losses go? Are they just ignored or will they be counted when selling the house? Thanks!

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wleuter

Employee

Question

A question about Vacation Home Rental Loss Limitation

Forum|Forum|2 years ago
September 29, 2023
1 reply
0 views

I saw this from the forum

You are not allowed to take losses on a rental property that has a mixture of personal and business use.

if you use it for personal purposes more than the greater of:

14 days, or
10% of the total days it is rented to others at a fair rental price.

My questions is

Will the losses be carried over to the next year in this scenario?

If so, how TurboTax handle it?

If not, where will the losses go? Are they just ignored or will they be counted when selling the house?

Thanks!

TurboTax Premier Online

Mike9241

assuming the answer to the 14day/10% of rental days question is yes.

there is a second question. "Was the property rented less than 15 days?" Any day rented to anyone at less than a fair rental price is considered a personal use day (not a rental day), Days rented to family members are personal use days unless fair rent is charged and it is their main home.

If you enter yes. the residence is a personal residence. rental income and expenses are not reported. Mortgage interest and taxes go on schedule A if a qaulified residence. Each currently has a limit as to deductibility.

Will the losses be carried over to the next year in this scenario? NO they are permanently gone

Will they be counted when selling the house? no

If you answer no, then expenses will be prorated (Turbo tax will do the prorations) with certain rules. the rental portion of interest and taxes is not limited to rental income. other expenses are subject to ordering rules with carryover allowed.

wleuterAuthor

Employee

@Mike9241

Thanks for your answer.

My understanding is when I rented the house for more than 15 days, I am not able to deduct any losses from the rental, right?

So if my expenses are more than my rental income, the losses will be carried over to the next year.

I want to know how TurboTax handle this carry over thing.

Will TurboTax save this losses somewhere and do the carry over for me when I use TurboTax again to file my tax return next year?

Anonymous_

Employee

@wleuter wrote:
Will TurboTax save this losses somewhere and do the carry over for me when I use TurboTax again to file my tax return next year?

If you rent for more than 15 days and your personal use is more than the greater of 14 days or 10% of the days rented at fair rental value, then losses attributable to expenses incurred strictly as a result of rental use are nonpassive. As such, any loss is not carried forward to the following tax year but is used to offset other types of income (or is disallowed completely, and not carried forward, if subject to the vacation home loss rules).

Again, expenses are allocated between rental use and personal use days (and expenses that are strictly rental expenses, such as advertising, management fees, commissions are allocated rental use exclusively while other, allocated, expenses may be subject to vacation home loss limitations).