VRBO rental income and expenses

Forum|Forum|3 years ago
March 27, 2023
2 replies
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Can anyone give me some input on why Turbo tax seems to adjust my expenses to the amount of my rental income. For example in 2022, i had approx 15K$ in rental income. The house was rented about 35% of the time throughout the year and i was there for three weeks working on the house doing improvements, repairs, etc. I had the AC fail and some other expensive repairs and the total for everything for the year came out to be around 22K$ out of pocket (including all the categories, tax, insurance, repairs, maintenance, advertising, travel, etc). So when I put in these numbers, Turbo tax adjusts the total out of pocket to the 15K$ number. It is like it will not let you deduct more than you received in income? It is like it will not let you take a loss more than 0$, when in fact i had a 22k-15k = 7$K loss.

CSKcpa56

From the information supplied it's hard to determine what is going on. IRS Pub 527 discusses rental units.

The following would need to be answered:

1. is the VRBO your home you rent out or is it a place you bought specifically to rent on VRBO. If so when is it available to rent? 100% of a year or 50%?

2. Where are you reporting the activity - are you using Schedule E to report it

3. How many days was the place available compared to when you were there?

4, there are limitations on losses from rentals - if you are not a real estate professional you're limited to $25K per year.

If you don't rent out the property a lot then your expenses might be limited to the amount of the income.

If there are expenses you incurred which were capital improvements to the property (like siding, landscaping, new air, etc.) those might not be currently deductible unless you use depreciation form 4562.

Vanessa A

It sounds like you are falling into the category of personal use property instead of a rental property.

In order to claim a loss on rental property, it would not be able to be considered personal use. It would need to be considered a rental property, otherwise your loss is limited to income received.

Based on your numbers, if it was rented for 35% of the year that would be 128 days. If you spent 21 days there and entered it as personal use, then you would be over the 10% allowed. Since you were there using the property for more than 12 days, this is limiting your loss which is the reason TurboTax is making it personal use property.

"You're considered to use a dwelling unit as a residence if you use it for personal purposes during the tax year for a number of days that’s more than the greater of:

14 days, or
10% of the total days you rent it to others at a fair rental price."https://www.irs.gov/taxtopics/tc415

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Anonymous_

Employee

@osbornedj

Was there any personal use of the property?

Note that days spent on the property when you are engaged in repairing, cleaning, or maintaining (but not improving) the property are not considered to be personal use days.

No one is going to be able to assist you without more details.

osbornedjAuthor

yes, thanks everyone for the help with this. Indeed this seems to be the problem and i need to get my exact numbers as i was just estimating earlier. I do have all the dates and numbers. In fact i was there longer... i was there working about 3 weeks non stop on the property, by myself, from sun up till sun down. Good to hear this isn't considered personal use as i felt like a contractor - it certainly was not vacation. Then my kids and wife arrived for about 10 days and we saw relatives but i continued to work on the property some during this time... although no where near to the degree that i was previously. I will get the exact numbers. I would estimate the time when the family was there that i worked on the property 35% of the time.