Vacation home without renters

[ChiHoang]

My client has a vacation home that she used 90 days, but could not rent any days in 2020. When I input zero or leave blank at "days rented at fair rental value" it gives me an error even though all expenses are zeros except having amounts in "depreciation" and "depreciation carryover".  How can I fix that error message ? Thanks

[TaxGuyBill]

The personal residence was not rented, so it is not a rental property. 

Schedule E is for rental properties, so the program won't let you have anything about a non-rental property on Schedule E.

So you need to delete it, and keep the information for if/when it becomes a rental property in the future.

[ChiHoang]

Thank you for your quick response.  The vacation home was rented in the past with depreciation and operating expenses carryover. If I delete schedule E this year, how do I capture all these information when it's rented next year. 

[dascpa]

There is a difference between "not rented" and "not available for rent". One means you removed the property as a rental and the other is treated still as a rental with no rental revenue.  The 90 days of personal use also creates tax issues.

[ChiHoang]

The property is available for rent but not rented. It's a vacation home, owners used 90 days in 2020 and zero day rented. It was rented in the prior years more than 14 days, so schedule E was prepared. Only this year 2020 was not rented and I input in schedule E 0 day rented at the fair rental value and 90 days of personal use, it gives me an error though I have no expenses except depreciation, operating expenses and depreciation carryover.  Someone suggested that I delete schedule E for this year. But my concern is how I carry the "carryover" to next year when the property is rented. Thanks in advance for your advice.

[dascpa]

I'll let you deal with the tax law of the issue but in ProSeries you can keep the Sch E, report -0- as rental revenue and no expenses.  For the depreciation you can override the asset entry worksheet depreciation amounts to -0- . This will reflect "not in service". That way next year the Schedule E data is still all there.

[ChiHoang]

Thanks for your response. But when I override depreciation and operating expense carryover. ProSeries gives me error message (red cell) and may prevent cross-checking. Can I still e-file with the error messages ?

[dascpa]

I've overridden and gotten no error messages. Strange.  It's not a good idea to do so but yes, when you submit an e-file you can uncheck the box to do error checking.

[TaxGuyBill]

Because of the personal use, it is their personal residence.  That changes the rules and "available for rent" does not matter.  It only matters if it was actually rented.  So the property is considered as 100% personal use for the year, not a rental at all.

[ChiHoang]

I understand what you're saying. But I want to get ProSeries works so that I can retain the old carryover information when it's rented in 2021. The way you suggest to delete schedule E, then all the old information is not there when I transfer 2020 file to 2021.  If there is no other option, I'll keep schedule E, override the depreciation, operating exp. carryover. I'll have to uncheck error message when e-file. Thanks

[TaxGuyBill]

Just to be clear, you want to force the tax return to show a rental property on Schedule E when there is NOT a rental property?

[ChiHoang]

I just want to maintain schedule E without income and expense for this year so that I can transfer all the expense carryover to next year when rental activities will occur. Do you have better solution in ProSeries ? 

[ChiHoang]

Anyone has better solutions than what I plan to do ? Thanks

[dascpa]

You are a tax professional.  You questioned and received info from peers.  At some point you need to take responsibility and handle your clients, their tax filings and the software the best way you see fit.  We are just people trying to help others on this board. 

[ChiHoang]

Thank you for your comments.