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June 3, 2019
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How do we report income we made off of a sublet from an apartment (in which we have no ownership) that we rented from a landlord (with permission, of course)?

  • June 3, 2019
  • 1 reply
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My understanding is that TurboTax has an option only for owners of the property to report income. However, we did not own the apartment. We rented it from a landlord and during the summer we sublet it while we were out of town. How do we report this income? 

Best answer by AmandaR1

You should report your rental income in the same section where someone would if they owned their home. In both situations, the income is reported as passive income from a rental activity on schedule E.

Since you don't own the home, you won't add the house in the Asset and Depreciation section. Alternatively, you can deduct the costs of renting your home, while it was being a subleased, under the expenses section. 

Since you don't own the home, you won't be able to take a loss (even if your expenses exceed the income), but you will be able to reduce, or eliminate, the income.

To enter your rental income for your apartment that you rent:

  1. Under Wages and Income, select to add income and then to see the list 
  2. Scroll down to Rentals, Royalties, and Farm and click Show More
  3. Select Start next to Rental Properties and Royalties (Sch E)
  4. The questions in this section are directed toward a home owner, but this is the correct place to enter your rental. Answer the questions, but look out for the following three: 
  • You'll be asked Was This Property Rented For All of 2017 and this is where you'll say No and enter the dates it was available to be rented and you weren't living it (which may be greater than the time you rented it)
  • On the Property Ownership screen, answer No. and on the next select No, I will calculate my own allocation. This means you'll need to enter your expense totals for the time you rented the property. This is best since you don't own the property. 
  • On the next screen about Active Participation, be sure to select No I am not an active participation.
  • You'll come to a screen titled Review Your XYZ Rental Summary and from here, you can enter all income and expenses by starting each section. 
  • 1 reply

    AmandaR1Answer
    Employee
    June 3, 2019

    You should report your rental income in the same section where someone would if they owned their home. In both situations, the income is reported as passive income from a rental activity on schedule E.

    Since you don't own the home, you won't add the house in the Asset and Depreciation section. Alternatively, you can deduct the costs of renting your home, while it was being a subleased, under the expenses section. 

    Since you don't own the home, you won't be able to take a loss (even if your expenses exceed the income), but you will be able to reduce, or eliminate, the income.

    To enter your rental income for your apartment that you rent:

    1. Under Wages and Income, select to add income and then to see the list 
    2. Scroll down to Rentals, Royalties, and Farm and click Show More
    3. Select Start next to Rental Properties and Royalties (Sch E)
    4. The questions in this section are directed toward a home owner, but this is the correct place to enter your rental. Answer the questions, but look out for the following three: 
    • You'll be asked Was This Property Rented For All of 2017 and this is where you'll say No and enter the dates it was available to be rented and you weren't living it (which may be greater than the time you rented it)
    • On the Property Ownership screen, answer No. and on the next select No, I will calculate my own allocation. This means you'll need to enter your expense totals for the time you rented the property. This is best since you don't own the property. 
    • On the next screen about Active Participation, be sure to select No I am not an active participation.
  • You'll come to a screen titled Review Your XYZ Rental Summary and from here, you can enter all income and expenses by starting each section. 
  • June 3, 2019
    With a personal sublet situation, is there an issue with profit motive with using Schedule E?  maybe that is why Turbotax avoids the issue by only dealing with situations where someone is the owner and is renting to make a profit, not offset rent expenses otherwise owed as tenant on main lease.  See IRS Pub. 527, p. 16 re: Not Rented for Profit.  If this is a concern and I am not missing something, it becomes of particular concern in 2018 to individual sub-letters since not even Itemized Deductions would be available