I have a second "home" that I rented for 83 days and used personally for 12 days. The depreciation is not being limited to the business use, but is allowing all the depreciation on Schedule E. When I did a search in ProConnect it said if the number of days of personal use is less than 14 days, or 10% or less of the Number of days rented, depreciation will be allowed in full. This is not my understanding and not consistent with other tax software I have used, which limits depreciation to the business use percentage. Any thoughts?
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You're right that §208A(e)(1) mandates that only expenses attributable to rental at fair market value may be deductible where "the taxpayer...uses a dwelling unit for personal purposes on any day during the taxable year (whether or not he is treated under this section as using such unit as a residence)". In other words, depreciation allowance must still be allocated between rental and personal use even though the taxpayer used the property for less than the thresholds defined under subsection (d)(1) and the deductions would not be subject to the subsection limitation under subsection (c)(5).
PTO does optimize the allocation of mortgage interest and real estate taxes between Sch A and Sch E so long as the number of days owned is entered. However, I do see two technical problems in PTO's computation when the taxpayer did not use the property for more than the greater of 14 days or 10% of the days rented at FMV (i.e. when the property does not qualify as a residence/vacation home) -
You're right that §208A(e)(1) mandates that only expenses attributable to rental at fair market value may be deductible where "the taxpayer...uses a dwelling unit for personal purposes on any day during the taxable year (whether or not he is treated under this section as using such unit as a residence)". In other words, depreciation allowance must still be allocated between rental and personal use even though the taxpayer used the property for less than the thresholds defined under subsection (d)(1) and the deductions would not be subject to the subsection limitation under subsection (c)(5).
PTO does optimize the allocation of mortgage interest and real estate taxes between Sch A and Sch E so long as the number of days owned is entered. However, I do see two technical problems in PTO's computation when the taxpayer did not use the property for more than the greater of 14 days or 10% of the days rented at FMV (i.e. when the property does not qualify as a residence/vacation home) -
Has anyone found a solution regarding how to get Lacerte to properly allocate depreciation for a vacation home rental that was used for personal use the greater of more that 14 days or 10% of business use?
I've encountered the same issue. After searching many screens and the forums, I decided to contact support and have resolved the issue. Make sure you have the asset properly coded in screen 22 under the "form" column. It needs to be listed as 11 (schedule e vacation home) and not 3 (schedule e rental). Make sure you have the correct activity tagged as well.
Was this resolved?
Right here, you are asking about ProConnect. You also posted about the issue under Lacerte.
I don't know which program you are using.
I used google:
Lacerte vacation home
And find:
It helps not to post in multiple old topics across programs you are not using. Asking in the topic for the product you are using, or starting your own topic in the forum for the product you are using, would help you get specific help on a specific issue for that specific program.
And not asking in multiple places means the peer volunteers don't have to seek out all the places you asked the same thing.
Good points, and I will try to be more careful. I have found myself accidently posting Proconnect before. I use Lacerte, but it seems to be easy to start there and drift over to other areas.
And I am definitely guilty of posting this in more than one area. I got (and am!) frustrated because I feel like Lacerte is not handling this issue correctly. I have reviewed all the "how to input" answers I can find, and I believe I am inputting as instructed, but I am not getting the results I expect. Now I have doubts that what I am expecting the correct result.
I have to put this down for the day and pick it back up tomorrow.
And, thank you for your worthwhile correction.
I tried your solution and it didn't work. What I was told by the Lacerte Support is to calculate business percentage manually and enter in the "Percentage of Business Use" under Additional Information of Depreciation Screen. To calculate the biz use percentage, I took total numbers rented divided by total numbers of days rented + days used for personal use. Hope this helps!!
Did you notice this topic is ProConnect, not Lacerte? Did you follow the link previously given, to the Lacerte article for how this works? Here it is, again:
And here is what Intuit tells you there:
"For vacation home purposes, Lacerte calculates percentage of business use by dividing the number of days rented by the sum of the number of days rented plus the number of days of personal use. The program applies this percentage to all indirect expenses, including indirect mortgage interest and real estate taxes."
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