Home Office Expense on a Schedule E

[taxn00b]

Tax payer has an LLC which he put a rental property into.  He wants to deduct home office expenses on schedule E, but I'm not sure where to deduct it.  If I just put it in the other expenses line, then how will it link to the home office expense form?  Or do can we file without that?

Also, is there any different treatment because of the LLC when it comes to determining whether the business qualifies as a real estate professional or not?

TIA

[Lee B]

Under the TCJA, the Home Office deduction has been significantly limited to Schedule C, Schedule F and to a limited extent to 1065 Partners

on Page 2 of Schedule E. I am not aware of a Home Office Deduction on Page 1 of Schedule E. If your client is a Partner of a PTS reporting on Form 1065,

there was a detailed discussion earlier this year of how and when Unreimbursed Partnership Expenses potentially including Home Office might be deducted

on Page 2 of Schedule E.

[taxn00b]

Where does it outline that in the TCJA?

[Lee B]

2 hours ago, taxn00b said:

Where does it outline that in the TCJA?

Do your own research

[Sara EA]

An LLC is a business structure granted by state statute.  For federal tax purposes, it is disregarded.  All it does it protect (sometimes) an owner's personal assets from being seized in a lawsuit against the company.  That's why it's called a Limited Liability Company. It does not make a passive activity active. Real estate professionals who meet the material participation tests file Sch C, not Sch E, and can claim home office.  Your client's single rental property likely is a passive activity (unless it's a huge complex that he works on full time).  In a nutshell, forming an LLC and putting property into it is a state classification and has nothing to do with federal taxation.  To the IRS, it's still whatever type of business it is and all the usual rules apply.

[DANRVAN]

7 hours ago, taxn00b said:

a rental property into.  He wants to deduct home office expenses

In order to take the OIH deduction, the rental activity would need to rise to the level of a trade or business.  

The only OIH change made by TCJA was elimination of 2106 that I am aware of.

[joanmcq]

Being a RE pro doesn’t put the income & expenses on a Sch C.  It simply makes the rental non-passive and losses are allowed in full.  There’s a checkbox on Sch E.  
Sch C comes into play for short term rentals where you provide significant services, like a hotel. 

[Sara EA]

If that is the case, no OIH in deduction?

[DANRVAN]

On 11/17/2021 at 5:53 PM, Sara EA said:

If that is the case, no OIH in deduction?

It comes down to whether the activity rises to the level of trade or business based on facts and circumstances, a grey area to say the least.

OP referred to "a property", I have clients with multiple properties that do not reach that level.  Maybe if it was a sizable apartment complex.