Rental expenses not fully reported on schedule E

Forum|Forum|2 years ago
February 13, 2024
2 replies
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I own a small condominium managed by an outside company. I stayed there 12 days last year, rented it out for 177. TurboTax decreases my expenses such as real estate taxes by the percentage personal use. Why does the 14 day 10% rule not apply.

thanks

Perry

AmeliesUncle

The rule for dividing expenses doesn't depend on if it is your "residence" (the 14 days 10% rule) or not. That rule in the tax code in §280A(e) even specifically says "whether or not he is treated under this section as using such unit as a residence".

PwexAuthor

Can you point me towards that ruling? I have read conflicting views.
thank you for your help

perry

AmeliesUncle

The law says at Section 280A(e):

In any case where a taxpayer who is an individual or an S corporation uses a dwelling unit for personal purposes on any day during the taxable year (whether or not he is treated under this section as using such unit as a residence), the amount deductible under this chapter with respect to expenses attributable to the rental of the unit (or portion thereof) for the taxable year shall not exceed an amount which bears the same relationship to such expenses as the number of days during each year that the unit (or portion thereof) is rented at a fair rental bears to the total number of days during such year that the unit (or portion thereof) is used.

https://www.law.cornell.edu/uscode/text/26/280A#e

mglauner

Check your Asset Entry Worksheet for your condo, for the Business Use %.

If it says 93.65% for example, then your Expenses are prorated accordingly between Schedule E and personal use.

PwexAuthor

It does reflect the pro-rating. My question is why. To me, the tax code states that if you meet the 14 day/10% rule, the property is considered a rental unit and that these expenses will be 100% eligible rather than pro-rated.

thanks for your response

perry