Not deducting rental loss even though meet income limit

Forum|Forum|3 years ago
March 28, 2023
1 reply
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In 2022 we rented out our primary residence for eight consecutive months while we rented another place to live. With expenses and depreciation, we have losses of about $3K. We meet the income threshold to deduct up to $25K in losses. I can't figure out why TurboTax isn't deducting it. At one point when I previewed the 1040, it was deducting it, but now it's not.

DianeW777

It depends. If your primary residence was rented only part of the year and then converted back to personal use there is an issue for you. You cannot depreciate property that is placed in service and removed from service in the same year. Also, there is a question about whether this was rented at fair rental value which is important, as well as whether you rented it to a relative.

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FessingdonBadgersAuthor

Thanks for responding. It was converted to a rental on May 1, 2022, and rented continuously to the same tenant through Jan. 15, 2023, when it reverted to our primary residence. We advertised the house and rented it at market value to someone we did not know.

FessingdonBadgersAuthor

I should also mention that TT calculates and includes the depreciation on Schedule E and concludes that there was a net loss with the rental, however it determines that I cannot deduct the loss. I can't figure out why it thinks I can't deduct the loss.