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June 13, 2023
Question

How do I get cash basis treatment on partial year rental property expenses

  • June 13, 2023
  • 2 replies
  • 0 views
Turbo Tax is allocating expenses by the number of days the property was rented

2 replies

Carl11_2
Employee
June 13, 2023

It "sounds" to me like you converted a property from personal use to a rental, and incorrectly indicated a number of personal use days greater than zero.  If so, see if this helps.

Date of Conversion - If this was your primary residence or 2nd home before, then this date is the day AFTER you moved out, or the date you decided to lease the property – whichever is later.
In Service Date - This is the date a renter "could" have moved in. Usually, this date is the day you put the FOR RENT sign in the front yard.
Number of days Rented - the day count for this starts from the first day a renter was contracted to move in, and/or "could" have moved in. That would be your "in service" date or after if you were asked for that. Vacant periods between renters do not count for actual days rented. Please see IRS Publication927 page 17 at https://www.irs.gov/pub/irs-pdf/p527.pdf#en_US_2020_publink1000219175 Read the “Example” in the third column.
Days of Personal Use - This number will be a big fat ZERO. Read the screen. It's asking for the number of days *YOU* lived in the property AFTER you converted it to a rental. I seriously doubt (though it is possible) that you lived in the house (or space, if renting a part of your home) as your primary residence, 2nd home, or any other personal use reasons after you converted it to a rental.
Business Use Percentage. 100%. I'll put that in words so there's no doubt I didn't make a typo here. One Hundred Percent. After you converted this property or space to rental use, it was one hundred percent business use. What you used it for prior to the date of conversion doesn't count.

kayrAuthor
June 15, 2023

Exactly right.   Thanks for your help.

Employee
June 14, 2023

@kayr wrote:
Turbo Tax is allocating expenses by the number of days the property was rented

Is the property a vacation (short-term) rental? Did you enter the number of days rented in the program?

 

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kayrAuthor
June 15, 2023

Thanks!   That info was helpful.