How do I change my rental use percentage from 80% to 50% in Turbo Tax for calculating expenses on a condo?

Forum|Forum|4 years ago
September 24, 2021
3 replies
0 views

No text available

TurboTax Online

Anonymous_

Employee

Does the condo have personal use throughout the tax year (i.e., is it a vacation/short-term rental)? If so, you need to enter the number of fair rental days and personal use days. TurboTax will then allocate the deductible expenses accordingly.

Note that you may also have to make an adjustment in the Assets/Depreciation section.

jhand001Author

Yes. I have been using it up to 20% of the year for personal use and time for repairs/maintenance. I plan to cut back on its availability and will only have it available to rent 50% of the year. The remaining 50% will be for personal use and maintenance/repairs. So, I need to change the percentage for allowable expenses and don't know how to do this in Turbo Tax.

Anonymous_

Employee

For the allocation of typical rental expenses, you have to enter the number of fair rental days and the number of personal use days.

Note that days spent primarily for maintenance/repairs are not personal use days.

Carl11_2

Employee

If the property is classified as a rental for the entire tax year (all 365 days of it) then there's really nothing to "change" per-se. You enter the number of personal use days and the number of business use days, and the program will allocate accordingly.

If the property is ***NOT*** classified as a rental for the entire tax year, then things are different. For example, if it's classified as a rental from Jan 1 thru Jun 30, and there is no personal use during that time, then the business use percentage is ONE HUNDRED PERCENT. You only enter expenses incurrred during that time and those expenses are ONE HUNDRED PERCENT deductible as rental expenses.

For this scenario, you have 182 business use days and ZERO days of personal use.

pda268

Only 10% of my home is rented out to a roommate for the whole year. Where to input 10% in Turbo Tax to calculate the depreciation for Schedule E, Form 1040?

Carl11_2

Employee

When you first start entering data for the rental, you *MUST* select the option for "* rent out a part of my home". That is the only way the program will ask you for a percentage.

Carl11_2

Employee

Note also that you can not "change" the percentage year to year. Now there's two types of percentages that I see in this thread.

- Percentage of floor space that is exclusive to the renter. This is most commonly used when you are renting out a part of your primary residence. This percentage can not just be arbitrarily changed each year. Changing it year to year will completely screw up the depreciation history and put you in what I refer to as "tax hell" when either you sell the property, or the IRS audits you.

- Percentage of time rented. This is most commonly used when you have a property where 100% of the space is rented out for part of the year. If rented out for several months, and then used for personal use the rest of the time, it's best to "declare" this property as a full rental for the entire year. Then when asked, you will report the number of days rented and the number of days of personal use. Those particular numbers *can* change every year. The program will then pro-rate your expenses between SCH E for the number of days rented, and SCH A for the number of days of personal use.

Now "personal use days" is not necessarily the number of days you actually lived in the property either. It's typically the number of days that the property was flat out "not available for rent", weather you were living in it or not. The number of days rented and days of personal use can be less than 365 days, but it can't be more than that.

The one thing the program will not pro-rate for you, is the property insurance. This is because property insurance is not deductible on the SCH A and never has been. Therefore, you may need to pro-rate the SCH E insurance costs manually yourself, and enter it.

In some situations the program will prorate the property taxes and mortgage interest for SCH E, but will not place the difference on the SCH A. Therefore, you should always check that once the return is completed in it's entirety (and not before) to ensure the SCH A prorated amounts are there.

Take note that if the total of your SCH A deductions do not exceed your standard deduction, then it won't matter if the pro-rated amounts are there or not, since it would be more beneficial to take the standard deduction instead of itemizing.