Schedul E and vacation home.

[billr617]

Hi-client has a second home . 73 days rental 14 days personal. The 14 days exceeds the 10% threshold

so it becomes a vacation home instead of full rental. I put all the expenses on Schedule E and it allocates

the correct percentage of everything (84%) but I can't seem to get the program to allocate the 16% balance to schedule A for the mortgage interest. It does populate it for the real estate taxes. I have type 3 -vacation short term rental selected and 73 and 14 for the rental/ personal days. 

    Anyone know what I am doing wrong?  I've tried checking the tax court method nothing changes . If I check the owner occupied box it does allocate but gets an error saying this is a vacation home.  I've tried using the 1098 and still no luck.

    Does it have to be done manually? Thanks in advance.

[rbynaker]

What happens if you change the personal use to 15 days?

[billr617]

If I change it to 15 days it works. Shouldn't it work at 14 though since that is greater than 10% of the rental, (7.3 )days? Does the program ignore it if it is 14 days, or am I misunderstanding the 14 day/10% rule? Thanks for the help!

[rbynaker]

It's 280A(d)(1) and 14 days does not "exceed the greater of 14 days or 10%".

The mortgage interest rules in 163(h)(4)(A)(i)(II) incorporate 280A by reference.

You should still get taxes (subject to SALT cap) since taxes are not limited to a qualified residence.

Rick

[TaxGuyBill]

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@rbynaker wrote:

does not "exceed the greater of 14 days or 10%".

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I must be getting sloppy and I didn't remember the "exceed" part.  Thanks.

[rbynaker]

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@TaxGuyBill wrote:

I must be getting sloppy and I didn't remember the "exceed" part.  Thanks.

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No big deal.  I've spent a lot of time in both 280A and 163 over the years...

[TaxGuyBill]

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@rbynaker wrote:

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No big deal.  I've spent a lot of time in both 280A and 163 over the years...

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That's the really annoying part; I've spent way too much time in 280A as well, and I forgot about that.

As for Section 163 ... my eyes glaze over whenever I get to those Regs (8T and 10T).  LOL.  😂

[rbynaker]

Both sections spin you in circles.  Here's a rule.  Here's an exception to the rule.  Here's an exception to the exception to the rule.  But wait, you might have this exception to the exception to the exception to the rule . . .

[billr617]

Thank you Rick, so if I understand correctly even though I exceeded the 10% of rental days

the fact that  that number(7.3) days is less than the 14 days (the greater number of the two possibilities) means that the property is a rental for tax purposes as opposed to a vacation home, even though the rentals are short term? Or am I completely misunderstanding this. Thank you!

[rbynaker]

There are a bunch of different rules that intersect and overlap.  You have 162 vs. 212, 280A, 469, 1402, etc.  I'm just addressing the "why can't I deduct this interest on Sch A" question. 🙂

[billr617]

Thank you for all the help!