TurboTax Schedule E - Days rented at fair rental value

6 Replies

Can someone explain how that number is used?

The way it was worded:

Days rented at fair rental value _____ Days of personal use _____

seems to suggest it was intended to distribute between personal use and business use.

If I have a rental unit that's occupied by a tenant for 300 days and vacant and available for rent for 65 days do I put 365 in the "Days rented at fair rental value" or 300?

Thanks in advance.

I need a beer after a tax preparation weekend.

You really need a CPA or EA to do your rental taxes.

I think you're looking at the section that deals with a rental that you use at least sometimes as a personal unit. This is usually a vacation rental where you use it sometimes, too. I don't recall the details, but I recall there's a 14 day threshold. If you use it less than 14 days a year, its just a rental. More than that and there are restrictions on (IIRC) depreciation.

Is this a vacation rental? What was going on those other 65 days? Thats a lot of vacancy for a regular rental.

It's just vacancy.

I had a tenant who just "disappeared". No letter no call no text, just moved out and I knew a week into it when a neighbor called told me the unit is vacant.

Happened over the holidays went through Thanksgiving and Christmas without much activities and after Jan 1 I got a bunch of sudden inquiries and too many applicants.

I don't think this applies to your situation; as Jon said, it's for a property that does get used for personal use some of the time. So your "rented days" would be 365, even though you had some vacancy.

I'm not an accountant, so take this contribution as just an opinion....

365 applies to days it was not personal use would be just that.

I guess this is my cue.

For the situation you mentioned above, you would use 300 for days rented and 0 for personal. The IRS doesn't count vacancy days as part of the equation.

Here's a clarifying snippet from the instructions of page for Schedule 1040SE: "For example, you used your property for personal use for 7 days and rented it for 63 days. In most cases, 10% (7/70) of your expen­ses are not rental expenses and cannot be deducted on Schedule E."

http://www.irs.gov/pub/irs-pdf/i1040se.pdf pg. E-5

As an interesting aside, my Tax prof actually filed a brief in an appeals case arguing that for interest and depreciation, 365 days should be used because those factors are dependent on time, not occupancy. His position was adopted by the 9th Circuit Court of Appeals, so if you live within their jurisdiction, the ruling can be used to get a little bit more back from the IRS if you have a 2nd home that you used for personal use and rented and you are not otherwise able to capture all of your depreciation for tax purposes. Let me know if this applies to you and we can discuss the details.

Since you haven't paid me for this service, I am not YOUR accountant and this is merely an example for reference purposes. You rely on this information at your own risk and by using it agree to limit any legal damages to the amount paid for services (that would be $0). Have a nice day.

To answer the OP, the personal days are used to reduce the deductions you are claiming, as you shouldn't get the benefit of using business property for personal use and get the tax deduction as a business expense. As a result, if you use property 7 days and rent it 63 as in the IRS Example posted above, then only 90% of the expenses qualify as deductions for taxes. Since your personal use is 0%, you'll get the entire amount of your deductions, so it isn't anything to worry about.

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here