Rental Property Expenses (Prorate vs direct amount)

Forum|Forum|2 years ago
February 13, 2024
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Hi, I have a question. I have a short term rental that I rented for 155 days (5 months straight). When I look at the expenses I have a few questions. I entered the total for real estate taxes, insurance premiums, and mortgage interest and those get prorated for 155/365, which makes sense as those expenses are equally distributed throughout the year. However cleaning/maintenance and utilities were not evenly distributed throughout the year and were much higher while the unit was rented. Here's an example:

Utilities for the year were $3789. Prorated at 155/365 that is a $1610 expense.

However, the utilities while rented (5 months straight) were an exact expense of $1926.

This tells me there is a $316 disadvantage using the prorating method.

Is there a different way to handle this? Can I pad the calculations to get the exact value, as I know what it is.

AnnetteB6

No, you should not pad the expenses in order to have the calculations come out to be the number that they should be.

Try going through the Rental Income and Expenses section and do not select the option for TurboTax to do the math for you. If this does not give the results you expect, then the complication is in the days of personal use versus rental or in the Property Profile where you show whether the property was converted to a rental from personal use, or vice versa.

If you are still having difficulty getting the correct numbers reported, please share more details about the entries you have made on the Property Profile section and we'll try to help with a solution.

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mjszaboAuthor

Hi, sounds good. Thanks for the info. Here is my property profile. I looked everywhere for the option to not select "TurboTax to do the math for you". I even tested making a secondary property and couldn't get to it. How do I get to that screen?

AnnetteB6

My apologies, after taking a closer look, the option to let TurboTax do the math shows up when only a portion of the property is being rented, not in your case when it was rented part of the year.

However, taking a look at your Property Profile, I see that you indicated that the property was converted to a rental during 2023. You also show 210 personal days and 155 rental days. If the personal days occurred prior to your converting the property to a rental, then that number should be zero. Personal use days are only entered if they occur after the property was converted to be a rental property.

Changing the personal use days should correct the prorated amounts for expenses directly related to the rental (cleaning/maintenance, utilities), but now you will need to prorate the items that are part personal and part rental (real estate taxes, mortgage interest, etc.) and enter only the portion that is related to the time the property was a rental.

@mjszabo

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