Rental Property Sch E

[ETax847]

Client lived in residence for first 4 months of the year, then converted it to a rental property. On Sch E for personal use days, do I count the days she lived in it as personal use, or do personal use days start as of when she started renting it out, thus making it 0?

[ljwalters]

When she converted it to a rental 0 personal days

[Terry D EA]

I agree the day she converted it or made it available for rent is when the time begins.

[ETax847]

Just talked to the IRS, and you must count the days that the person lived in it, even it if it was before it was considered a rental.

[jainen]

>>Just talked to the IRS, and you must count the days that the person lived in it, even it if it was before it was considered a rental.<<

Wrong. That's only if you use the property in between rentals. If you rent it for more than 12 months, the vacation rules don't apply after the property is converted. See page 18 of Pub 527.

[ETax847]

Here is what I found in that pub:

　

Used as a home and rented 15 days or more.

If you use a dwelling unit as a home and rent it 15 days or more during the year, include all your rental income in your income. Since you used the dwelling unit for personal purposes, you must divide your expenses between the rental use and the personal use as described earlier in this chapter under Dividing Expenses. The expenses for personal use ARE NOT DEDUCTIBLE as rental expenses.

If you had a net profit

[Pacun]

Here is what I found in that pub:

　

Used as a home and rented 15 days or more.

If you use a dwelling unit as a home and rent it 15 days or more during the year, include all your rental income in your income. Since you used the dwelling unit for personal purposes, you must divide your expenses between the rental use and the personal use as described earlier in this chapter under Dividing Expenses. The expenses for personal use ARE NOT DEDUCTIBLE as rental expenses.

If you had a net p

The answers given on this forum are correct. You are mixing two things which are completely different.

One thing is to convert a house to rental and another is to rent your house while you are on vacation. If I go to my country for a month and I rent my house more than 14 days, and then I come back to live in it, then what you are saying is correct.

You are also corrent in the sense that you have to divide expenses.

Since your client lived in the house 4 months and then rented it for 8, you have to devide expenses. Let's say that you have a 1098 that shows that 1200 were paid in real estate taxes and you also paid 18,000 in Mortgage interest. You will enter 400 on schedule A for RE taxes and 800 on Sch E. For mortgage interest, $6000 will go to sch A and $12000 to schedule.

Imaging that the client paid $1,200 to insure the house, then $800 on schedule E and the rest is not deductible.

[jainen]

>>Here is what I found in that pub...<<

Yes, I know about that paragraph on page nineteen. But I specifically said page EIGHTEEN! Go back and read about "Days used as a main home before or after renting."

[michaelmars]

Just talked to the IRS, and you must count the days that the person lived in it, even it if it was before it was considered a rental.

it is amazing to me how people here always quote what the irs told them. its been proven they are wrong 50% of the time and unless its in writing you can't rely on what a clerk hired for the season tells you. if they were always right you wouldn't need audit conferences, appeals or tax court.

[jainen]

>>they are wrong 50% of the time<<

Sometimes one has to be careful asking the right question. Sometimes one has to be careful listening to the answer.