Real Estate Professional Home Office

Forum|Forum|4 years ago
October 14, 2021
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I own and manage 11 rental properties and qualify as a real estate professional. I do all my properties on Schedule Es. Do I do my home office for my management of my properties on a Schedule C? Would I just show zero income on my Schedule C since I'm showing all of my income on the Schedule Es? Thanks

TurboTax Home & Biz Windows

AmeliesUncle

The home office expenses would go on Schedule E, divided between the rental properties. You will need to manually calculate the allowable deduction.

Mike9241

Turbotax has again messed up the depreciation worksheets. there should be a code M for Home Office that you can select. it is currently gone. hopefully, they will have a fix by tomorrow. also Turbotax is not currently computing the HO deduction correctly. it is using 100% of the cost of the property not the pro-rata portion allocable to the home office.

by the way have you made the IRC 460(c)(7)(A) election to aggregate your rental activities

(7)Special rules for taxpayers in real property business

(A)In generalIf this paragraph applies to any taxpayer for a taxable year—

(i)

paragraph (2) shall not apply to any rental real estate activity of such taxpayer for such taxable year, and

(ii)

this section shall be applied as if each interest of the taxpayer in rental real estate were a separate activity.

Notwithstanding clause (ii), a taxpayer may elect to treat all interests in rental real estate as one activity. Nothing in the preceding provisions of this subparagraph shall be construed as affecting the determination of whether the taxpayer materially participates with respect to any interest in a limited partnership as a limited partner.

(B)Taxpayers to whom paragraph appliesThis paragraph shall apply to a taxpayer for a taxable year if—

(i)

more than one-half of the personal services performed in trades or businesses by the taxpayer during such taxable year are performed in real property trades or businesses in which the taxpayer materially participates, and

(ii)

such taxpayer performs more than 750 hours of services during the taxable year in real property trades or businesses in which the taxpayer materially participates.

In the case of a joint return, the requirements of the preceding sentence are satisfied if and only if either spouse separately satisfies such requirements. For purposes of the preceding sentence, activities in which a spouse materially participates shall be determined under subsection (h).

(C)Real property trade or business

For purposes of this paragraph, the term “real property trade or business” means any real property development, redevelopment, construction, reconstruction, acquisition, conversion, rental, operation, management, leasing, or brokerage trade or business

The aggregation of rentals (that is only applicable to real estate professionals) is not supported by TurboTax.

if you haven't made the election the default rule is that each property is treated as an independent activity for which the taxpayer must satisfy the material participation requirement

The IRS has set up several criteria that a taxpayer can use to see if he has materially participated in a business. Some of these criteria are:

The taxpayer worked at least 500 hours in the business during the tax year; or

The taxpayer did nearly all of the work in the activity; or

The taxpayer worked more than 100 hours in the activity and no one else worked more hours; or

The taxpayer has materially participated in the activity in any 5 of the last 10 years.

without aggregation you just spend 500 hours on each property otherwise you are subject to Passive Activity Rules.

lkng67re

What if I have a business office as a real estate agent at the rental house and work 5 months on advertising, sales, etc. and advertise the property for rental and then have rentals October or November to April 30? I also do a lot of maintenance on the house in the summer while I am there for the rental side to keep it ready for the fall through spring rentals.

I am confused as to whether I need a schedule C for the real estate work and a schedule E for the rental work. I spent a lot more hours than stated on both the real estate and the rental side.

Your help is appreciated