How do i calculate vacation rental personal vs business use?

Forum|Forum|7 years ago
June 1, 2019
2 replies
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I live in NYC but acquired a vacation home in Pennsylvania in mid-2015. I renovated the house and started renting it to guests in July 2016. I occasionally use it but most of the time it's available for rental. The property is actively listed for rent. How do I calculate business vs. personal use? How do I calculate depreciation and other expenses? Please help me with this. Thanks!

TurboTax Premier Online

T

TaxGuyBill

Employee

The program will ask you how many days it rented, and how many days you used it for personal purposes. It will then prorate your expenses based on those numbers.

M

MichaelMc

Employee

If you have any personal use of a dwelling unit (including a vacation home) that you rent, you must divide your expenses between rental use and personal use.

If your personal use of the dwelling unit is more than the greater of:

1. 14 days, or

2. 10% of the total days you rent it to others at a fair rental price,

limitations may apply to the rental expenses that you can deduct.

In general, your rental expenses, including depreciation and insurance, will be no more than your total expenses multiplied by a fraction; the numerator of which is the total number of day actually rented at a fair rental price and the denominator of which is the total number of days the dwelling unit is used. Days that the dwelling unit was available for rental, but not actually rented do not count.

Only your rental expenses may be deducted on Schedule E (Form 1040). Note that the non-rental portion of mortgage interest and real estate taxes may be deducted in Schedule A (Form 1040) if you itemize deductions.

Detailed information about rental income and expenses can be found in IRS Pub. 527 Residential Rental Property.

This TurboTax article will guide you through the specifics of Where do I enter income and expenses from a rental property?