How can I allocate indirect expenses associated with renting part of primary residence?

Forum|Forum|6 years ago
April 14, 2020
2 replies
0 views

I have a client who rents out a portion of their home. I am trying to allocate all direct expenses to the Schedule E, as well as a portion of indirect expenses (insurance, mortgage interest, taxes, utilities). Based on square footage of the rental portion compared to total house, and the number of days rented, I have calculated the applicable portion to be 15%. Depending on how I post the Form 1098 (either as Main Home or Rental Activity), and link it to the Schedule E, the taxes and interest either show up entirely on the Schedule A or Schedule E. Without actually overriding these figures, what is the proper method for posting a portion of these expenses to both the Schedule A and Schedule E?

ProSeries Professional

This topic has been closed for replies.

Best answer by TaxGuyBill

I prefer to have as much info in ProSeries as possible, as opposed to tracking it offline in a spreadsheet in order to split it out manually. What I envisioned in using the 1098 worksheet was that that would allow me to enter the data in once and the program would allocate it based on the percentages I set in the Sch E. That is what I thought the "allocate personal use items to Schedule A" checkbox would do for me. If that in no way affects the Sch A, then I'm not sure why they entitled it as they did.

I guess I don't know how the 1098 is supposed to work, but as you've pointed out, it appears to be lacking.

But there is no need to manually split anything. If you just enter the full dollar amounts on the schedule E, and it will automatically send the personal amounts to Schedule A (assuming you check the allocate box). Try it without that 1098 worksheet and I think you'll see it works fine.

T

TaxGuyBill

Level 15

You can either manually enter the amounts (there is no need to enter the actual 1098), or better yet, check the box on the Schedule E Worksheet for "Owner Occupied" rental, and enter the percentage there.

D

davetodd11Author

Level 5

I did try using the "Owner-Occupied Rentals" portion of the Sch E worksheet, but then it wants to apply that same percentage to all of the direct expenses as well. And for some reason, if I change the percentage in column (b) for a particular expense, the worksheet completely ignores this override and always post the column (c) amount based on the percentage in the column (b) header - not what I indicate in column (b) for the individual expense.

T

TaxGuyBill

Level 15

@davetodd11 wrote:
I did try using the "Owner-Occupied Rentals" portion of the Sch E worksheet, but then it wants to apply that same percentage to all of the direct expenses as well. And for some reason, if I change the percentage in column (b) for a particular expense, the worksheet completely ignores this override and always post the column (c) amount based on the percentage in the column (b) header - not what I indicate in column (b) for the individual expense.

Changing the percentage works for me. Sometimes it takes a few seconds to trigger, but it works for me. Try changing it, then restart the program and see if that triggers it.

rbynaker

Level 13

@davetodd11 wrote:
Based on square footage of the rental portion compared to total house, and the number of days rented

In my experience, ProSeries can handle ONE allocation pretty well (space OR time). But if you have TWO allocations (space AND time), you're better off on a spreadsheet and then just manually enter the resulting numbers on A and E.

D

davetodd11Author

Level 5

I used a spreadsheet to come up with the single multiplier of 15%. Was hoping that having just that one allocation, ProSeries would be able to handle the divvying up of the indirect expenses. However, it does not seem to want to accept the % overrides I'm putting in the Expenses section. It allows me to enter the %, but then completely ignores it when calculating what should appear on Sch E as an expense. I really expected better of this program.

Sign up

Login with SSO

Let's get you signed in

Login with SSO

Scanning file for viruses.

This file cannot be downloaded