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Report income and deductions for property rented at least 15 days that doesn't meet personal use test

According to Publication 527, Residential Rental Property (Including Rental of Vacation Homes), you meet the personal use test if your personal use of the property is more than the greater of:
  • 14 days, or
  • 10% of total days rented to others at fair rental price.
According to Publication 527, if you don't meet this test:
Your property is considered rental property and your rental expenses, which are proportional to the portion of rental use, will be reported on Schedule E and will be subject to passive loss limitations.
The personal portion of expenses, including qualified mortgage interest, property taxes, and qualified casualty loss (if any), will be reported as normally allowed on Schedule A (Form 1040). The personal portion of the remaining rental expenses are not deductible because they are personal expenses.
important
The most important part of the preceding text is the last paragraph. The taxpayer should report the personal portion of expenses as normally allowed on Schedule A. This text isn't stating that these expenses are allowed, but rather, that you should report these expenses as normally allowed. Publication 527 continues to state:
The personal portion of the remaining rental expenses are not deductible because they are personal expenses.
 Therefore, the personal portion of the expenses, including mortgage interest, won't transfer to Schedule A.

This article applies to:

  • PRODUCT: UltraTax CS
  • Return type: 1040 Individual

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