Rentals
Hello! How do I file renting a house that is not my primary residence, in New York State? If I rent it for one week the entire year? Would I get better tax savings if I don't rent it?
Answers
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Hello!
That is a great question!
Generally, you can fill out a Schedule E to report the income or loss from rental properties. In FreeTaxUSA, this is done under the "Income" tab > "Rental Income (Schedule E)."
You'll need to determine if you used the rental house as a personal home during the year. If you used the house for personal use more than 14 days or more than 10% of the total days it was rented to others at a fair rental price, then the IRS considers that the house was used as a personal home during the year.
If you did not use the house as a personal home during the year, then you can deduct all your expenses for the rental part, subject to certain "at-risk rules" and "passive activity loss rules."
If you used the house as a personal home and rented the house for less than 15 days, then don't report the rental income, and don't deduct rental expenses. You can however deduct allowable interest, taxes, and casualty losses if you take the itemized deductions on your return.
For general situations, a day of personal use is a day used by yourself or family for personal use, or when the house is rented out for less than a fair rental price.
Days spent repairing and maintaining the unit do not count as personal use.
You can find more information with the instructions for Schedule E, and Publication 527:
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Thank you! If you tried to rent it but haven't had much luck (ie no income), can you still report it as a rental?
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The IRS uses the term, "placed in service" to determine when you can begin reporting rental income and expenses. Generally, property is considered placed in service when it is ready and available for a specific use, regardless of whether or not it is actually used at the time.
Because rental income is generally considered passive income, your losses will likely be limited if you have no income for the year. These limited losses can carryforward to offset future rental income.
