Expensing travel and home office without Sch C

2 Replies

I have multiple rental properties, report all income/expenses oh individual properties Sch E.

when I tried to deduct default calculated home expense TurboTax took me though the maze of questions on bushiness and since I don't have a business, per say, it determined that my business income is not sufficient it looks like it rely on Sch C, which I don't have.

Question:

1. Do I need to reallocate parts of Schedule E income to Sch C and create a sole proprietorship business? Seems convoluted and creates additional taxation.

2. In the absence of Sch C listed business, how I expense travel expenses for exploring out of state opportunities..none of these expenses are allocatable to the existing Sch E properties

Originally posted by @LEONID ORLOV :

I have multiple rental properties, report all income/expenses oh individual properties Sch E.

when I tried to deduct default calculated home expense TurboTax took me though the maze of questions on bushiness and since I don't have a business, per say, it determined that my business income is not sufficient it looks like it rely on Sch C, which I don't have.

Question:

1. Do I need to reallocate parts of Schedule E income to Sch C and create a sole proprietorship business? Seems convoluted and creates additional taxation.

2. In the absence of Sch C listed business, how I expense travel expenses for exploring out of state opportunities..none of these expenses are allocatable to the existing Sch E properties

Homeoffice can be deducted against rental income. There are court cases that allow that. Your software might not be intelligent enough to know that. It might be limited based on your net income and might have to be carried over. 

Travel cost to investigate the market is not a business expense unless you are running your business a certain way (Your advisor needs to help you). The cost of travel after identifying the specific property is added to the basis rather than deducting it right away. 

Ashish,

Thanks for your response.

Travel expenses for my business are legit, because I own and explore purchasing other properties in other locations.

The conundrum is that I can't deduct such travel expenses against existing properties income on Sch E.

And have no income from the out of state properties that I am researching for acquisition. As I understand, the only way to expense this activity if I create a business n Sch C and allocate some income from the existing properties which maybe will allow me to expense these business related activities

Thanks again for your feedback