Where do I find out which method(irs vs tax court method) I used in previous years for my rental house?

Forum|Forum|6 years ago
June 1, 2019
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PatriciaV

Employee

Yes, you can determine which method you used to allocate interest and taxes on a prior return by calculating the percentage that applies to your Rental Expense.

The Tax Court method uses the ratio of days rented divided by the number of days in the year.

The IRS method uses the ration of days rented divided by the total days used (rental days + personal days).

In the workpapers for your prior year return, look for Schedule E Worksheet for your Rental Property. Rental days and Days of personal use appear in the top section. Mortgage Interest appears on Line 12. Column (c) shows the allocation to your rental property; column (e) shows the allocation to personal use.

Use the values from this worksheet to calculate the allocation using both methods to see which one you used last year.

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bigrodent

Thanks for the helpful explanation. Can you further explain in the TaxCourt method how the days that are neither actively rented nor used as personal get accounted for?

Are they considered rented if the property is open for rentals but didn't book? (Personal days % = personal days/365)
OR

Are they lumped into personal? (Rented days % = days rented/365)

Thanks!

peter941

Unused days are the same as used days in the tax court method. It usually results in lower rental expense but higher personal expense. This is typically better if you itemize deductions.

To find which way you used previously you can also look for the Schedule E worksheet and look for the line that says

"Check to allocate interest and taxes using the Tax Court Method"

and see if the checkbox is checked or not.