On rental property repair expenses. If it was rented mid-year should I put the whole year expenses or just for the time that it was being prepared to rent and was rented?

Forum|Forum|3 years ago
March 23, 2023
2 replies
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I noticed that when I go back to the property info page, it only shows a portion of what I entered in the "Repair expenses" so I'm assuming the system already prorates the whole year expenses based on the date it was rented, but wanted to double check if I should put the whole year expense (including the time I was living in the house) or only when it was rented?

TurboTax Premier Online

DavidD66

You do not include/enter expenses you incurred while living in the house. You only include as expenses those costs incurred while the property was available to be rented, or actually rented. Costs incurred to get the property ready to rent (repairs, painting, etc.) should be added to your cost basis.

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Rider2Author

Thanks for the quick response @DavidD66. So in that case why does TurboTax reduce the amount dramatically? If I put $3000 and hit OK, it changes to $500 on the summary page

DavidD66

It's hard to say for sure with such limited information and not being able to see it. Since you started renting it mid-year, it could be because you inadvertently set it up like a vacation rental, and indicated the number of days it was rented and the number of days of personal use. The program would then allocated all expenses between rental and personal based on the number of days indicated for each.

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Carl11_2

Employee

Most likely it's because you incorrectly indicated it was not rented the entire year, and therefore incorrectly indicated a number of personal use days greater than zero.

Rental Property Dates & Numbers That Matter.

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_publink[phone number removed] 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.