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Old 12-15-2010, 05:40 PM
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Schedule A or E Rental

I rented my house out for the summer while back east. The guy I talked to about this at the IRS said I should take it as a miscellaneous income on the 1040 because it wasn't for profit and not do a Schedule E but I want to write off my expenses for property and I think I would have less gain with a schedule E then putting expenses with Schedule A. Whats your take on this? Thanks



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Old 12-19-2010, 05:08 PM
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“ I should take it as a miscellaneous income on the 1040 because it wasn't for profit and not do a Schedule E but I want to write off my expenses for property and I think I would have less gain with a schedule E then putting expenses with Schedule A. Whats your take on this?”-----> I guess it depends on the situation; If your residence is rented for fewer than 15 days during the year, the rental period is disregarded and it is treated as your personal residence for tax purposes. Then rental income is NOT taxable at all and ONLY your mortgage interest and real estate taxes are allowed as itemized deductions on your Sch A( if your itemized deductions> your standard deduction). You can’t deduct other expenses i.e., utilities, maintenance or etc. However, if the residence was rented for 15days or more and is used for personal purposes for more than 14 days or 10% of the days rented, whichever is greater, then your residence is treated as rental property. You should report rental income and expenses on Sch E. what you need to keep in mind I sthat the rental expenses must be allocated between personal and rental days. If this is the case, then the rental expenses may exceed your rental income and the resulting loss(if applicable)’d be deducted against other income ,regular income, I mean, subject to either at risk or passive loss activity rules. If the residence is rented for 15 days or more and is used for your personal purposes for more than 14 days, or 10% of the days rented, whichever is greater, then your allocable rental expenses are deducted only to the extent of rental income and you report your rental income on SCH E. Expenses are also allocated between the rental and personal days again before the limits are applied. ONLY the interest and real estate taxes allocable to your personal use of the residence are deductible as itemized deduction on Sch A of 1040.The personal portion of the utilities, maintenance or repair or etc. is a nondeductible personal expense.



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