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File 2006 Taxes Online

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File 2006 Taxes Online

File 2006 taxes online Publication 946 - Introductory Material Table of Contents What's New for 2013 What's New for 2014 Reminders IntroductionOrdering forms and publications. File 2006 taxes online Tax questions. File 2006 taxes online What's New for 2013 Increased section 179 deduction dollar limits. File 2006 taxes online  The maximum amount you can elect to deduct for most section 179 property you placed in service in 2013 is $500,000 ($535,000 for qualified enterprise zone property). File 2006 taxes online This limit is reduced by the amount by which the cost of the property placed in service during the tax year exceeds $2,000,000. File 2006 taxes online See Dollar Limits under How Much Can You Deduct in chapter 2. File 2006 taxes online Depreciation limits on business vehicles. File 2006 taxes online  The total section 179 deduction and depreciation you can deduct for a passenger automobile (that is not a truck or van) you use in your business and first placed in service in 2013 is $3,160, if the special depreciation allowance does not apply. File 2006 taxes online The maximum deduction you can take for a truck or van you use in your business and first placed in service in 2013 is $3,360, if the special depreciation allowance does not apply. File 2006 taxes online See Maximum Depreciation Deduction in chapter 5. File 2006 taxes online Special allowance for qualified second generation biofuel plant property. File 2006 taxes online . File 2006 taxes online  For tax years ending after December 31, 2012, you may be able to take a 50% special depreciation allowance for qualified second generation biofuel plant property placed in service after January 2, 2013, and before January 1, 2014. File 2006 taxes online Election to accelerate minimum tax credits for round 3 extension property. File 2006 taxes online . File 2006 taxes online  For tax years ending after December 31, 2012, a corporation can elect to claim pre-2006 unused minimum tax credits in lieu of the special depreciation allowance for round 3 extension property. File 2006 taxes online What's New for 2014 Expiration of the increased section 179 deduction limits and expanded definition of section 179 property. File 2006 taxes online  For tax years beginning after 2013, the increased section 179 expense deduction limit and threshold amount before reduction in limitation will no longer apply. File 2006 taxes online Also, the definition of section 179 property will no longer include certain qualified real property. File 2006 taxes online Expiration of the 7-year recovery period for motor sports entertainment complexes. File 2006 taxes online  Qualified motor sports entertainment complex property placed in service after December 31, 2013, will not be treated as 7-year property under MACRS. File 2006 taxes online Expiration of the 15-year recovery period for qualified leasehold improvement, restaurant, and retail improvement properties. File 2006 taxes online  Qualified leasehold improvement property, qualified restaurant property, and qualified retail improvement property placed in service after December 31, 2013, will not be treated as 15-year property under MACRS. File 2006 taxes online Expiration of the accelerated depreciation for qualified Indian reservation property. File 2006 taxes online  The accelerated depreciation of property on an Indian Reservation will not apply to property placed in service after December 31, 2013. File 2006 taxes online Expiration of the 3-year recovery period for certain race horses. File 2006 taxes online  The 3-year recovery period for race horses two years old or younger will expire for such horses placed in service after December 31, 2013. File 2006 taxes online Reminders Photographs of missing children. File 2006 taxes online  The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. File 2006 taxes online Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. File 2006 taxes online You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. File 2006 taxes online Introduction Future developments. File 2006 taxes online   For the latest information about developments related to Publication 946 such as legislation enacted after this publication was published, go to www. File 2006 taxes online irs. File 2006 taxes online gov/pub946. File 2006 taxes online This publication explains how you can recover the cost of business or income-producing property through deductions for depreciation (for example, the special depreciation allowance and deductions under the Modified Accelerated Cost Recovery System (MACRS)). File 2006 taxes online It also explains how you can elect to take a section 179 deduction, instead of depreciation deductions, for certain property, and the additional rules for listed property. File 2006 taxes online The depreciation methods discussed in this publication generally do not apply to property placed in service before 1987. File 2006 taxes online For more information, see Publication 534, Depreciating Property Placed in Service Before 1987. File 2006 taxes online Definitions. File 2006 taxes online   Many of the terms used in this publication are defined in the Glossary near the end of the publication. File 2006 taxes online Glossary terms used in each discussion under the major headings are listed before the beginning of each discussion throughout the publication. File 2006 taxes online Do you need a different publication?   The following table shows where you can get more detailed information when depreciating certain types of property. File 2006 taxes online For information on depreciating: See Publication: A car 463, Travel, Entertainment, Gift, and Car Expenses Residential rental property 527, Residential Rental Property (Including Rental of Vacation Home) Office space in your home 587, Business Use of Your Home (Including Use by Daycare Providers) Farm property 225, Farmer's Tax Guide Comments and suggestions. File 2006 taxes online   We welcome your comments about this publication and your suggestions for future editions. File 2006 taxes online   You can write to us at the following address: Internal Revenue Service Business, Exempt Organizations and International Forms and Publications Branch SE:W:CAR:MP:T:B 1111 Constitution Ave. File 2006 taxes online NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. File 2006 taxes online Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. File 2006 taxes online   You can send us comments from www. File 2006 taxes online irs. File 2006 taxes online gov/formspubs/. File 2006 taxes online Select “Comment on Tax Forms and Publications” under “More Information. File 2006 taxes online ”   Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products. File 2006 taxes online Ordering forms and publications. File 2006 taxes online   Visit www. File 2006 taxes online irs. File 2006 taxes online gov/formspubs/ to download forms and publications, call 1-800-TAX-FORM (1-800-829-3676), or write to the address below and receive a response within 10 days after your request is received. File 2006 taxes online Internal Revenue Service 1201 N. File 2006 taxes online Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. File 2006 taxes online   If you have a tax question, check the information available on IRS. File 2006 taxes online gov or call 1-800-829-1040. File 2006 taxes online We cannot answer tax questions sent to either of the above addresses. File 2006 taxes online Prev  Up  Next   Home   More Online Publications
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File 2006 taxes online 9. File 2006 taxes online   Rental Income and Expenses Table of Contents Introduction Useful Items - You may want to see: Rental Income Rental ExpensesVacant while listed for sale. File 2006 taxes online Repairs and Improvements Other Expenses Property Changed to Rental Use Renting Part of Property Not Rented for Profit Personal Use of Dwelling Unit (Including Vacation Home)Example. File 2006 taxes online Dividing Expenses Dwelling Unit Used as a Home Reporting Income and Deductions DepreciationChanging your accounting method to deduct unclaimed depreciation. File 2006 taxes online Limits on Rental LossesAt-Risk Rules Passive Activity Limits How To Report Rental Income and ExpensesSchedule E (Form 1040) Introduction This chapter discusses rental income and expenses. File 2006 taxes online It also covers the following topics. File 2006 taxes online Personal use of dwelling unit (including vacation home). File 2006 taxes online Depreciation. File 2006 taxes online Limits on rental losses. File 2006 taxes online How to report your rental income and expenses. File 2006 taxes online If you sell or otherwise dispose of your rental property, see Publication 544, Sales and Other Dispositions of Assets. File 2006 taxes online If you have a loss from damage to, or theft of, rental property, see Publication 547, Casualties, Disasters, and Thefts. File 2006 taxes online If you rent a condominium or a cooperative apartment, some special rules apply to you even though you receive the same tax treatment as other owners of rental property. File 2006 taxes online See Publication 527, Residential Rental Property, for more information. File 2006 taxes online Useful Items - You may want to see: Publication 527 Residential Rental Property 534 Depreciating Property Placed in Service Before 1987 535 Business Expenses 925 Passive Activity and At-Risk Rules 946 How To Depreciate Property Form (and Instructions) 4562 Depreciation and Amortization 6251 Alternative Minimum Tax—Individuals 8582 Passive Activity Loss Limitations Schedule E (Form 1040) Supplemental Income and Loss Rental Income In most cases, you must include in your gross income all amounts you receive as rent. File 2006 taxes online Rental income is any payment you receive for the use or occupation of property. File 2006 taxes online In addition to amounts you receive as normal rent payments, there are other amounts that may be rental income. File 2006 taxes online When to report. File 2006 taxes online   If you are a cash-basis taxpayer, you report rental income on your return for the year you actually or constructively receive it. File 2006 taxes online You are a cash-basis taxpayer if you report income in the year you receive it, regardless of when it was earned. File 2006 taxes online You constructively receive income when it is made available to you, for example, by being credited to your bank account. File 2006 taxes online   For more information about when you constructively receive income, see Accounting Methods in chapter 1. File 2006 taxes online Advance rent. File 2006 taxes online   Advance rent is any amount you receive before the period that it covers. File 2006 taxes online Include advance rent in your rental income in the year you receive it regardless of the period covered or the method of accounting you use. File 2006 taxes online Example. File 2006 taxes online You sign a 10-year lease to rent your property. File 2006 taxes online In the first year, you receive $5,000 for the first year's rent and $5,000 as rent for the last year of the lease. File 2006 taxes online You must include $10,000 in your income in the first year. File 2006 taxes online Canceling a lease. File 2006 taxes online   If your tenant pays you to cancel a lease, the amount you receive is rent. File 2006 taxes online Include the payment in your income in the year you receive it regardless of your method of accounting. File 2006 taxes online Expenses paid by tenant. File 2006 taxes online   If your tenant pays any of your expenses, the payments are rental income. File 2006 taxes online Because you must include this amount in income, you can deduct the expenses if they are deductible rental expenses. File 2006 taxes online See Rental Expenses , later, for more information. File 2006 taxes online Property or services. File 2006 taxes online   If you receive property or services, instead of money, as rent, include the fair market value of the property or services in your rental income. File 2006 taxes online   If the services are provided at an agreed upon or specified price, that price is the fair market value unless there is evidence to the contrary. File 2006 taxes online Security deposits. File 2006 taxes online   Do not include a security deposit in your income when you receive it if you plan to return it to your tenant at the end of the lease. File 2006 taxes online But if you keep part or all of the security deposit during any year because your tenant does not live up to the terms of the lease, include the amount you keep in your income in that year. File 2006 taxes online   If an amount called a security deposit is to be used as a final payment of rent, it is advance rent. File 2006 taxes online Include it in your income when you receive it. File 2006 taxes online Part interest. File 2006 taxes online   If you own a part interest in rental property, you must report your part of the rental income from the property. File 2006 taxes online Rental of property also used as your home. File 2006 taxes online   If you rent property that you also use as your home and you rent it less than 15 days during the tax year, do not include the rent you receive in your income and do not deduct rental expenses. File 2006 taxes online However, you can deduct on Schedule A (Form 1040) the interest, taxes, and casualty and theft losses that are allowed for nonrental property. File 2006 taxes online See Personal Use of Dwelling Unit (Including Vacation Home) , later. File 2006 taxes online Rental Expenses This part discusses expenses of renting property that you ordinarily can deduct from your rental income. File 2006 taxes online It includes information on the expenses you can deduct if you rent part of your property, or if you change your property to rental use. File 2006 taxes online Depreciation , which you can also deduct from your rental income, is discussed later. File 2006 taxes online Personal use of rental property. File 2006 taxes online   If you sometimes use your rental property for personal purposes, you must divide your expenses between rental and personal use. File 2006 taxes online Also, your rental expense deductions may be limited. File 2006 taxes online See Personal Use of Dwelling Unit (Including Vacation Home) , later. File 2006 taxes online Part interest. File 2006 taxes online   If you own a part interest in rental property, you can deduct expenses that you paid according to your percentage of ownership. File 2006 taxes online When to deduct. File 2006 taxes online   If you are a cash-basis taxpayer, you generally deduct your rental expenses in the year you pay them. File 2006 taxes online Depreciation. File 2006 taxes online   You can begin to depreciate rental property when it is ready and available for rent. File 2006 taxes online See Placed-in-Service under When Does Depreciation Begin and End in chapter 2 of Publication 527. File 2006 taxes online Pre-rental expenses. File 2006 taxes online   You can deduct your ordinary and necessary expenses for managing, conserving, or maintaining rental property from the time you make it available for rent. File 2006 taxes online Uncollected rent. File 2006 taxes online   If you are a cash-basis taxpayer, do not deduct uncollected rent. File 2006 taxes online Because you have not included it in your income, it is not deductible. File 2006 taxes online Vacant rental property. File 2006 taxes online   If you hold property for rental purposes, you may be able to deduct your ordinary and necessary expenses (including depreciation) for managing, conserving, or maintaining the property while the property is vacant. File 2006 taxes online However, you cannot deduct any loss of rental income for the period the property is vacant. File 2006 taxes online Vacant while listed for sale. File 2006 taxes online   If you sell property you held for rental purposes, you can deduct the ordinary and necessary expenses for managing, conserving, or maintaining the property until it is sold. File 2006 taxes online If the property is not held out and available for rent while listed for sale, the expenses are not deductible rental expenses. File 2006 taxes online Repairs and Improvements Generally, an expense for repairing or maintaining your rental property may be deducted if you are not required to capitalize the expense. File 2006 taxes online Improvements. File 2006 taxes online   You must capitalize any expense you pay to improve your rental property. File 2006 taxes online An expense is for an improvement if it results in a betterment to your property, restores your property, or adapts your property to a new or different use. File 2006 taxes online Betterments. File 2006 taxes online   Expenses that may result in a betterment to your property include expenses for fixing a pre-existing defect or condition, enlarging or expanding your property, or increasing the capacity, strength, or quality of your property. File 2006 taxes online Restoration. File 2006 taxes online   Expenses that may be for restoration include expenses for replacing a substantial structural part of your property, repairing damage to your property after you properly adjusted the basis of your property as a result of a casualty loss, or rebuilding your property to a like-new condition. File 2006 taxes online Adaptation. File 2006 taxes online   Expenses that may be for adaptation include expenses for altering your property to a use that is not consistent with the intended ordinary use of your property when you began renting the property. File 2006 taxes online Separate the costs of repairs and improvements, and keep accurate records. File 2006 taxes online You will need to know the cost of improvements when you sell or depreciate your property. File 2006 taxes online The expenses you capitalize for improving your property can generally be depreciated as if the improvement were separate property. File 2006 taxes online Other Expenses Other expenses you can deduct from your rental income include advertising, cleaning and maintenance, utilities, fire and liability insurance, taxes, interest, commissions for the collection of rent, ordinary and necessary travel and transportation, and other expenses, discussed next. File 2006 taxes online Insurance premiums paid in advance. File 2006 taxes online   If you pay an insurance premium for more than one year in advance, for each year of coverage you can deduct the part of the premium payment that will apply to that year. File 2006 taxes online You cannot deduct the total premium in the year you pay it. File 2006 taxes online Legal and other professional fees. File 2006 taxes online   You can deduct, as a rental expense, legal and other professional expenses, such as tax return preparation fees you paid to prepare Schedule E (Form 1040), Part I. File 2006 taxes online For example, on your 2013 Schedule E, you can deduct fees paid in 2013 to prepare your 2012 Schedule E, Part I. File 2006 taxes online You can also deduct, as a rental expense, any expense (other than federal taxes and penalties) you paid to resolve a tax underpayment related to your rental activities. File 2006 taxes online Local benefit taxes. File 2006 taxes online   In most cases, you cannot deduct charges for local benefits that increase the value of your property, such as charges for putting in streets, sidewalks, or water and sewer systems. File 2006 taxes online These charges are nondepreciable capital expenditures, and must be added to the basis of your property. File 2006 taxes online However, you can deduct local benefit taxes that are for maintaining, repairing, or paying interest charges for the benefits. File 2006 taxes online Local transportation expenses. File 2006 taxes online    You may be able to deduct your ordinary and necessary local transportation expenses if you incur them to collect rental income or to manage, conserve, or maintain your rental property. File 2006 taxes online However, transportation expenses incurred to travel between your home and a rental property generally constitute nondeductible commuting costs unless you use your home as your principal place of business. File 2006 taxes online See Publication 587, Business Use of Your Home, for information on determining if your home office qualifies as a principal place of business. File 2006 taxes online   Generally, if you use your personal car, pickup truck, or light van for rental activities, you can deduct the expenses using one of two methods: actual expenses or the standard mileage rate. File 2006 taxes online For 2013, the standard mileage rate for business use is 56. File 2006 taxes online 5 cents per mile. File 2006 taxes online For more information, see chapter 26. File 2006 taxes online    To deduct car expenses under either method, you must keep records that follow the rules in chapter 26. File 2006 taxes online In addition, you must complete Form 4562, Part V, and attach it to your tax return. File 2006 taxes online Rental of equipment. File 2006 taxes online   You can deduct the rent you pay for equipment that you use for rental purposes. File 2006 taxes online However, in some cases, lease contracts are actually purchase contracts. File 2006 taxes online If so, you cannot deduct these payments. File 2006 taxes online You can recover the cost of purchased equipment through depreciation. File 2006 taxes online Rental of property. File 2006 taxes online   You can deduct the rent you pay for property that you use for rental purposes. File 2006 taxes online If you buy a leasehold for rental purposes, you can deduct an equal part of the cost each year over the term of the lease. File 2006 taxes online Travel expenses. File 2006 taxes online   You can deduct the ordinary and necessary expenses of traveling away from home if the primary purpose of the trip is to collect rental income or to manage, conserve, or maintain your rental property. File 2006 taxes online You must properly allocate your expenses between rental and nonrental activities. File 2006 taxes online You cannot deduct the cost of traveling away from home if the primary purpose of the trip was to improve your property. File 2006 taxes online You recover the cost of improvements by taking depreciation. File 2006 taxes online For information on travel expenses, see chapter 26. File 2006 taxes online    To deduct travel expenses, you must keep records that follow the rules in chapter 26. File 2006 taxes online   See Rental Expenses in Publication 527 for more information. File 2006 taxes online Property Changed to Rental Use If you change your home or other property (or a part of it) to rental use at any time other than the beginning of your tax year, you must divide yearly expenses, such as taxes and insurance, between rental use and personal use. File 2006 taxes online You can deduct as rental expenses only the part of the expense that is for the part of the year the property was used or held for rental purposes. File 2006 taxes online You cannot deduct depreciation or insurance for the part of the year the property was held for personal use. File 2006 taxes online However, you can include the home mortgage interest, qualified mortgage insurance premiums, and real estate tax expenses for the part of the year the property was held for personal use as an itemized deduction on Schedule A (Form 1040). File 2006 taxes online Example. File 2006 taxes online Your tax year is the calendar year. File 2006 taxes online You moved from your home in May and started renting it out on June 1. File 2006 taxes online You can deduct as rental expenses seven-twelfths of your yearly expenses, such as taxes and insurance. File 2006 taxes online Starting with June, you can deduct as rental expenses the amounts you pay for items generally billed monthly, such as utilities. File 2006 taxes online Renting Part of Property If you rent part of your property, you must divide certain expenses between the part of the property used for rental purposes and the part of the property used for personal purposes, as though you actually had two separate pieces of property. File 2006 taxes online You can deduct the expenses related to the part of the property used for rental purposes, such as home mortgage interest, qualified mortgage insurance premiums, and real estate taxes, as rental expenses on Schedule E (Form 1040). File 2006 taxes online You can also deduct as rental expenses a portion of other expenses that normally are nondeductible personal expenses, such as expenses for electricity or painting the outside of your house. File 2006 taxes online There is no change in the types of expenses deductible for the personal-use part of your property. File 2006 taxes online Generally, these expenses may be deducted only if you itemize your deductions on Schedule A (Form 1040). File 2006 taxes online You cannot deduct any part of the cost of the first phone line even if your tenants have unlimited use of it. File 2006 taxes online You do not have to divide the expenses that belong only to the rental part of your property. File 2006 taxes online For example, if you paint a room that you rent, or if you pay premiums for liability insurance in connection with renting a room in your home, your entire cost is a rental expense. File 2006 taxes online If you install a second phone line strictly for your tenants' use, all of the cost of the second line is deductible as a rental expense. File 2006 taxes online You can deduct depreciation, discussed later, on the part of the house used for rental purposes as well as on the furniture and equipment you use for rental purposes. File 2006 taxes online How to divide expenses. File 2006 taxes online   If an expense is for both rental use and personal use, such as mortgage interest or heat for the entire house, you must divide the expense between the rental use and the personal use. File 2006 taxes online You can use any reasonable method for dividing the expense. File 2006 taxes online It may be reasonable to divide the cost of some items (for example, water) based on the number of people using them. File 2006 taxes online The two most common methods for dividing an expense are based on (1) the number of rooms in your home, and (2) the square footage of your home. File 2006 taxes online Not Rented for Profit If you do not rent your property to make a profit, you can deduct your rental expenses only up to the amount of your rental income. File 2006 taxes online You cannot deduct a loss or carry forward to the next year any rental expenses that are more than your rental income for the year. File 2006 taxes online For more information about the rules for an activity not engaged in for profit, see Not-for-Profit Activities in chapter 1 of Publication 535. File 2006 taxes online Where to report. File 2006 taxes online   Report your not-for-profit rental income on Form 1040, line 21. File 2006 taxes online For example, you can include your mortgage interest and any qualified mortgage insurance premiums (if you use the property as your main home or second home), real estate taxes, and casualty losses on the appropriate lines of Schedule A (Form 1040) if you itemize your deductions. File 2006 taxes online   If you itemize your deductions, claim your other rental expenses, subject to the rules explained in chapter 1 of Publication 535, as miscellaneous itemized deductions on Form 1040, Schedule A, line 23. File 2006 taxes online You can deduct these expenses only if they, together with certain other miscellaneous itemized deductions, total more than 2% of your adjusted gross income. File 2006 taxes online Personal Use of Dwelling Unit (Including Vacation Home) If you have any personal use of a dwelling unit (including a vacation home) that you rent, you must divide your expenses between rental use and personal use. File 2006 taxes online In general, your rental expenses will be no more than your total expenses multiplied by a fraction; the denominator of which is the total number of days the dwelling unit is used and the numerator of which is the total number of days actually rented at a fair rental price. File 2006 taxes online Only your rental expenses may be deducted on Schedule E (Form 1040). File 2006 taxes online Some of your personal expenses may be deductible if you itemize your deductions on Schedule A (Form 1040). File 2006 taxes online You must also determine if the dwelling unit is considered a home. File 2006 taxes online The amount of rental expenses that you can deduct may be limited if the dwelling unit is considered a home. File 2006 taxes online Whether a dwelling unit is considered a home depends on how many days during the year are considered to be days of personal use. File 2006 taxes online There is a special rule if you used the dwelling unit as a home and you rented it for less than 15 days during the year. File 2006 taxes online Dwelling unit. File 2006 taxes online   A dwelling unit includes a house, apartment, condominium, mobile home, boat, vacation home, or similar property. File 2006 taxes online It also includes all structures or other property belonging to the dwelling unit. File 2006 taxes online A dwelling unit has basic living accommodations, such as sleeping space, a toilet, and cooking facilities. File 2006 taxes online   A dwelling unit does not include property used solely as a hotel, motel, inn, or similar establishment. File 2006 taxes online Property is used solely as a hotel, motel, inn, or similar establishment if it is regularly available for occupancy by paying customers and is not used by an owner as a home during the year. File 2006 taxes online Example. File 2006 taxes online   You rent a room in your home that is always available for short-term occupancy by paying customers. File 2006 taxes online You do not use the room yourself, and you allow only paying customers to use the room. File 2006 taxes online The room is used solely as a hotel, motel, inn, or similar establishment and is not a dwelling unit. File 2006 taxes online Dividing Expenses If you use a dwelling unit for both rental and personal purposes, divide your expenses between the rental use and the personal use based on the number of days used for each purpose. File 2006 taxes online When dividing your expenses, follow these rules. File 2006 taxes online Any day that the unit is rented at a fair rental price is a day of rental use even if you used the unit for personal purposes that day. File 2006 taxes online This rule does not apply when determining whether you used the unit as a home. File 2006 taxes online Any day that the unit is available for rent but not actually rented is not a day of rental use. File 2006 taxes online Example. File 2006 taxes online Your beach cottage was available for rent from June 1 through August 31 (92 days). File 2006 taxes online During that time, except for the first week in August (7 days) when you were unable to find a renter, you rented the cottage at a fair rental price. File 2006 taxes online The person who rented the cottage for July allowed you to use it over the weekend (2 days) without any reduction in or refund of rent. File 2006 taxes online Your family also used the cottage during the last 2 weeks of May (14 days). File 2006 taxes online The cottage was not used at all before May 17 or after August 31. File 2006 taxes online You figure the part of the cottage expenses to treat as rental expenses as follows. File 2006 taxes online The cottage was used for rental a total of 85 days (92 − 7). File 2006 taxes online The days it was available for rent but not rented (7 days) are not days of rental use. File 2006 taxes online The July weekend (2 days) you used it is rental use because you received a fair rental price for the weekend. File 2006 taxes online You used the cottage for personal purposes for 14 days (the last 2 weeks in May). File 2006 taxes online The total use of the cottage was 99 days (14 days personal use + 85 days rental use). File 2006 taxes online Your rental expenses are 85/99 (86%) of the cottage expenses. File 2006 taxes online Note. File 2006 taxes online When determining whether you used the cottage as a home, the July weekend (2 days) you used it is considered personal use even though you received a fair rental price for the weekend. File 2006 taxes online Therefore, you had 16 days of personal use and 83 days of rental use for this purpose. File 2006 taxes online Because you used the cottage for personal purposes more than 14 days and more than 10% of the days of rental use (8 days), you used it as a home. File 2006 taxes online If you have a net loss, you may not be able to deduct all of the rental expenses. File 2006 taxes online See Dwelling Unit Used as a Home, next. File 2006 taxes online Dwelling Unit Used as a Home If you use a dwelling unit for both rental and personal purposes, the tax treatment of the rental expenses you figured earlier under Dividing Expenses and rental income depends on whether you are considered to be using the dwelling unit as a home. File 2006 taxes online You use a dwelling unit as a home during the tax year if you use it for personal purposes more than the greater of: 14 days, or 10% of the total days it is rented to others at a fair rental price. File 2006 taxes online See What is a day of personal use , later. File 2006 taxes online Fair rental price. File 2006 taxes online   A fair rental price for your property generally is the amount of rent that a person who is not related to you would be willing to pay. File 2006 taxes online The rent you charge is not a fair rental price if it is substantially less than the rents charged for other properties that are similar to your property in your area. File 2006 taxes online   If a dwelling unit is used for personal purposes on a day it is rented at a fair rental price, do not count that day as a day of rental use in applying (2) above. File 2006 taxes online Instead, count it as a day of personal use in applying both (1) and (2) above. File 2006 taxes online What is a day of personal use?   A day of personal use of a dwelling unit is any day that the unit is used by any of the following persons. File 2006 taxes online You or any other person who has an interest in the unit, unless you rent it to another owner as his or her main home under a shared equity financing agreement (defined later). File 2006 taxes online However, see Days used as a main home before or after renting , later. File 2006 taxes online A member of your family or a member of the family of any other person who owns an interest in the unit, unless the family member uses the dwelling unit as his or her main home and pays a fair rental price. File 2006 taxes online Family includes only your spouse, brothers and sisters, half-brothers and half-sisters, ancestors (parents, grandparents, etc. File 2006 taxes online ), and lineal descendants (children, grandchildren, etc. File 2006 taxes online ). File 2006 taxes online Anyone under an arrangement that lets you use some other dwelling unit. File 2006 taxes online Anyone at less than a fair rental price. File 2006 taxes online Main home. File 2006 taxes online   If the other person or member of the family in (1) or (2) above has more than one home, his or her main home is ordinarily the one he or she lived in most of the time. File 2006 taxes online Shared equity financing agreement. File 2006 taxes online   This is an agreement under which two or more persons acquire undivided interests for more than 50 years in an entire dwelling unit, including the land, and one or more of the co-owners is entitled to occupy the unit as his or her main home upon payment of rent to the other co-owner or owners. File 2006 taxes online Donation of use of property. File 2006 taxes online   You use a dwelling unit for personal purposes if: You donate the use of the unit to a charitable organization, The organization sells the use of the unit at a fund-raising event, and The “purchaser” uses the unit. File 2006 taxes online Examples. File 2006 taxes online   The following examples show how to determine days of personal use. File 2006 taxes online Example 1. File 2006 taxes online You and your neighbor are co-owners of a condominium at the beach. File 2006 taxes online Last year, you rented the unit to vacationers whenever possible. File 2006 taxes online The unit was not used as a main home by anyone. File 2006 taxes online Your neighbor used the unit for 2 weeks last year; you did not use it at all. File 2006 taxes online Because your neighbor has an interest in the unit, both of you are considered to have used the unit for personal purposes during those 2 weeks. File 2006 taxes online Example 2. File 2006 taxes online You and your neighbors are co-owners of a house under a shared equity financing agreement. File 2006 taxes online Your neighbors live in the house and pay you a fair rental price. File 2006 taxes online Even though your neighbors have an interest in the house, the days your neighbors live there are not counted as days of personal use by you. File 2006 taxes online This is because your neighbors rent the house as their main home under a shared equity financing agreement. File 2006 taxes online Example 3. File 2006 taxes online You own a rental property that you rent to your son. File 2006 taxes online Your son does not own any interest in this property. File 2006 taxes online He uses it as his main home and pays you a fair rental price. File 2006 taxes online Your son's use of the property is not personal use by you because your son is using it as his main home, he owns no interest in the property, and he is paying you a fair rental price. File 2006 taxes online Example 4. File 2006 taxes online You rent your beach house to Joshua. File 2006 taxes online Joshua rents his cabin in the mountains to you. File 2006 taxes online You each pay a fair rental price. File 2006 taxes online You are using your house for personal purposes on the days that Joshua uses it because your house is used by Joshua under an arrangement that allows you to use his house. File 2006 taxes online Days used for repairs and maintenance. File 2006 taxes online   Any day that you spend working substantially full time repairing and maintaining (not improving) your property is not counted as a day of personal use. File 2006 taxes online Do not count such a day as a day of personal use even if family members use the property for recreational purposes on the same day. File 2006 taxes online Days used as a main home before or after renting. File 2006 taxes online   For purposes of determining whether a dwelling unit was used as a home, you may not have to count days you used the property as your main home before or after renting it or offering it for rent as days of personal use. File 2006 taxes online Do not count them as days of personal use if: You rented or tried to rent the property for 12 or more consecutive months. File 2006 taxes online You rented or tried to rent the property for a period of less than 12 consecutive months and the period ended because you sold or exchanged the property. File 2006 taxes online However, this special rule does not apply when dividing expenses between rental and personal use. File 2006 taxes online Examples. File 2006 taxes online   The following examples show how to determine whether you used your rental property as a home. File 2006 taxes online Example 1. File 2006 taxes online You converted the basement of your home into an apartment with a bedroom, a bathroom, and a small kitchen. File 2006 taxes online You rented the basement apartment at a fair rental price to college students during the regular school year. File 2006 taxes online You rented to them on a 9-month lease (273 days). File 2006 taxes online You figured 10% of the total days rented to others at a fair rental price is 27 days. File 2006 taxes online During June (30 days), your brothers stayed with you and lived in the basement apartment rent free. File 2006 taxes online Your basement apartment was used as a home because you used it for personal purposes for 30 days. File 2006 taxes online Rent-free use by your brothers is considered personal use. File 2006 taxes online Your personal use (30 days) is more than the greater of 14 days or 10% of the total days it was rented (27 days). File 2006 taxes online Example 2. File 2006 taxes online You rented the guest bedroom in your home at a fair rental price during the local college's homecoming, commencement, and football weekends (a total of 27 days). File 2006 taxes online Your sister-in-law stayed in the room, rent free, for the last 3 weeks (21 days) in July. File 2006 taxes online You figured 10% of the total days rented to others at a fair rental price is 3 days. File 2006 taxes online The room was used as a home because you used it for personal purposes for 21 days. File 2006 taxes online That is more than the greater of 14 days or 10% of the 27 days it was rented (3 days). File 2006 taxes online Example 3. File 2006 taxes online You own a condominium apartment in a resort area. File 2006 taxes online You rented it at a fair rental price for a total of 170 days during the year. File 2006 taxes online For 12 of those days, the tenant was not able to use the apartment and allowed you to use it even though you did not refund any of the rent. File 2006 taxes online Your family actually used the apartment for 10 of those days. File 2006 taxes online Therefore, the apartment is treated as having been rented for 160 (170 − 10) days. File 2006 taxes online You figured 10% of the total days rented to others at a fair rental price is 16 days. File 2006 taxes online Your family also used the apartment for 7 other days during the year. File 2006 taxes online You used the apartment as a home because you used it for personal purposes for 17 days. File 2006 taxes online That is more than the greater of 14 days or 10% of the 160 days it was rented (16 days). File 2006 taxes online Minimal rental use. File 2006 taxes online   If you use the dwelling unit as a home and you rent it less than 15 days during the year, that period is not treated as rental activity. File 2006 taxes online See Used as a home but rented less than 15 days , later, for more information. File 2006 taxes online Limit on deductions. File 2006 taxes online   Renting a dwelling unit that is considered a home is not a passive activity. File 2006 taxes online Instead, if your rental expenses are more than your rental income, some or all of the excess expenses cannot be used to offset income from other sources. File 2006 taxes online The excess expenses that cannot be used to offset income from other sources are carried forward to the next year and treated as rental expenses for the same property. File 2006 taxes online Any expenses carried forward to the next year will be subject to any limits that apply for that year. File 2006 taxes online This limitation will apply to expenses carried forward to another year even if you do not use the property as your home for that subsequent year. File 2006 taxes online   To figure your deductible rental expenses for this year and any carryover to next year, use Worksheet 9-1. File 2006 taxes online Reporting Income and Deductions Property not used for personal purposes. File 2006 taxes online   If you do not use a dwelling unit for personal purposes, see How To Report Rental Income and Expenses , later, for how to report your rental income and expenses. File 2006 taxes online Property used for personal purposes. File 2006 taxes online   If you do use a dwelling unit for personal purposes, then how you report your rental income and expenses depends on whether you used the dwelling unit as a home. File 2006 taxes online Not used as a home. File 2006 taxes online   If you use a dwelling unit for personal purposes, but not as a home, report all the rental income in your income. File 2006 taxes online Since you used the dwelling unit for personal purposes, you must divide your expenses between the rental use and the personal use as described earlier in Dividing Expenses . File 2006 taxes online The expenses for personal use are not deductible as rental expenses. File 2006 taxes online   Your deductible rental expenses can be more than your gross rental income; however, see Limits on Rental Losses , later. File 2006 taxes online Used as a home but rented less than 15 days. File 2006 taxes online   If you use a dwelling unit as a home and you rent it less than 15 days during the year, its primary function is not considered to be rental and it should not be reported on Schedule E (Form 1040). File 2006 taxes online You are not required to report the rental income and rental expenses from this activity. File 2006 taxes online The expenses, including qualified mortgage interest, property taxes, and any qualified casualty loss will be reported as normally allowed on Schedule A (Form 1040). File 2006 taxes online See the Instructions for Schedule A (Form 1040) for more information on deducting these expenses. File 2006 taxes online Used as a home and rented 15 days or more. File 2006 taxes online   If you use a dwelling unit as a home and rent it 15 days or more during the year, include all your rental income in your income. File 2006 taxes online Since you used the dwelling unit for personal purposes, you must divide your expenses between the rental use and the personal use as described earlier in Dividing Expenses . File 2006 taxes online The expenses for personal use are not deductible as rental expenses. File 2006 taxes online   If you had a net profit from renting the dwelling unit for the year (that is, if your rental income is more than the total of your rental expenses, including depreciation), deduct all of your rental expenses. File 2006 taxes online You do not need to use Worksheet 9-1. File 2006 taxes online   However, if you had a net loss from renting the dwelling unit for the year, your deduction for certain rental expenses is limited. File 2006 taxes online To figure your deductible rental expenses and any carryover to next year, use Worksheet 9-1. File 2006 taxes online Depreciation You recover the cost of income-producing property through yearly tax deductions. File 2006 taxes online You do this by depreciating the property; that is, by deducting some of the cost each year on your tax return. File 2006 taxes online Three factors determine how much depreciation you can deduct each year: (1) your basis in the property, (2) the recovery period for the property, and (3) the depreciation method used. File 2006 taxes online You cannot simply deduct your mortgage or principal payments, or the cost of furniture, fixtures, and equipment, as an expense. File 2006 taxes online You can deduct depreciation only on the part of your property used for rental purposes. File 2006 taxes online Depreciation reduces your basis for figuring gain or loss on a later sale or exchange. File 2006 taxes online You may have to use Form 4562 to figure and report your depreciation. File 2006 taxes online See How To Report Rental Income and Expenses , later. File 2006 taxes online Alternative minimum tax (AMT). File 2006 taxes online    If you use accelerated depreciation, you may be subject to the AMT. File 2006 taxes online Accelerated depreciation allows you to deduct more depreciation earlier in the recovery period than you could deduct using a straight line method (same deduction each year). File 2006 taxes online Claiming the correct amount of depreciation. File 2006 taxes online   You should claim the correct amount of depreciation each tax year. File 2006 taxes online If you did not claim all the depreciation you were entitled to deduct, you must still reduce your basis in the property by the full amount of depreciation that you could have deducted. File 2006 taxes online   If you deducted an incorrect amount of depreciation for property in any year, you may be able to make a correction by filing Form 1040X, Amended U. File 2006 taxes online S Individual Income Tax Return. File 2006 taxes online If you are not allowed to make the correction on an amended return, you can change your accounting method to claim the correct amount of depreciation. File 2006 taxes online See Claiming the correct amount of depreciation in chapter 2 of Publication 527 for more information. File 2006 taxes online Changing your accounting method to deduct unclaimed depreciation. File 2006 taxes online   To change your accounting method, you generally must file Form 3115, Application for Change in Accounting Method, to get the consent of the IRS. File 2006 taxes online In some instances, that consent is automatic. File 2006 taxes online For more information, see chapter 1 of Publication 946. File 2006 taxes online Land. File 2006 taxes online   You cannot depreciate the cost of land because land generally does not wear out, become obsolete, or get used up. File 2006 taxes online The costs of clearing, grading, planting, and landscaping are usually all part of the cost of land and cannot be depreciated. File 2006 taxes online More information. File 2006 taxes online   See Publication 527 for more information about depreciating rental property and see Publication 946 for more information about depreciation. File 2006 taxes online Limits on Rental Losses If you have a loss from your rental real estate activity, two sets of rules may limit the amount of loss you can deduct. File 2006 taxes online You must consider these rules in the order shown below. File 2006 taxes online At-risk rules. File 2006 taxes online These rules are applied first if there is investment in your rental real estate activity for which you are not at risk. File 2006 taxes online This applies only if the real property was placed in service after 1986. File 2006 taxes online Passive activity limits. File 2006 taxes online Generally, rental real estate activities are considered passive activities and losses are not deductible unless you have income from other passive activities to offset them. File 2006 taxes online However, there are exceptions. File 2006 taxes online At-Risk Rules You may be subject to the at-risk rules if you have: A loss from an activity carried on as a trade or business or for the production of income, and Amounts invested in the activity for which you are not fully at risk. File 2006 taxes online Losses from holding real property (other than mineral property) placed in service before 1987 are not subject to the at-risk rules. File 2006 taxes online In most cases, any loss from an activity subject to the at-risk rules is allowed only to the extent of the total amount you have at risk in the activity at the end of the tax year. File 2006 taxes online You are considered at risk in an activity to the extent of cash and the adjusted basis of other property you contributed to the activity and certain amounts borrowed for use in the activity. File 2006 taxes online See Publication 925 for more information. File 2006 taxes online Passive Activity Limits In most cases, all rental real estate activities (except those of certain real estate professionals, discussed later) are passive activities. File 2006 taxes online For this purpose, a rental activity is an activity from which you receive income mainly for the use of tangible property, rather than for services. File 2006 taxes online Limits on passive activity deductions and credits. File 2006 taxes online    Deductions or losses from passive activities are limited. File 2006 taxes online You generally cannot offset income, other than passive income, with losses from passive activities. File 2006 taxes online Nor can you offset taxes on income, other than passive income, with credits resulting from passive activities. File 2006 taxes online Any excess loss or credit is carried forward to the next tax year. File 2006 taxes online   For a detailed discussion of these rules, see Publication 925. File 2006 taxes online    You may have to complete Form 8582 to figure the amount of any passive activity loss for the current tax year for all activities and the amount of the passive activity loss allowed on your tax return. File 2006 taxes online Real estate professionals. File 2006 taxes online   Rental activities in which you materially participated during the year are not passive activities if, for that year, you were a real estate professional. File 2006 taxes online For a detailed discussion of the requirements, see Publication 527. File 2006 taxes online For a detailed discussion of material participation, see Publication 925. File 2006 taxes online Exception for Personal Use of Dwelling Unit If you used the rental property as a home during the year, any income, deductions, gain, or loss allocable to such use shall not be taken into account for purposes of the passive activity loss limitation. File 2006 taxes online Instead, follow the rules explained in Personal Use of Dwelling Unit (Including Vacation Home), earlier. File 2006 taxes online Exception for Rental Real Estate Activities With Active Participation If you or your spouse actively participated in a passive rental real estate activity, you may be able to deduct up to $25,000 of loss from the activity from your nonpassive income. File 2006 taxes online This special allowance is an exception to the general rule disallowing losses in excess of income from passive activities. File 2006 taxes online Similarly, you may be able to offset credits from the activity against the tax on up to $25,000 of nonpassive income after taking into account any losses allowed under this exception. File 2006 taxes online Active participation. File 2006 taxes online   You actively participated in a rental real estate activity if you (and your spouse) owned at least 10% of the rental property and you made management decisions or arranged for others to provide services (such as repairs) in a significant and bona fide sense. File 2006 taxes online Management decisions that may count as active participation include approving new tenants, deciding on rental terms, approving expenditures, and similar decisions. File 2006 taxes online Maximum special allowance. File 2006 taxes online   The maximum special allowance is: $25,000 for single individuals and married individuals filing a joint return for the tax year, $12,500 for married individuals who file separate returns for the tax year and lived apart from their spouses at all times during the tax year, and $25,000 for a qualifying estate reduced by the special allowance for which the surviving spouse qualified. File 2006 taxes online   If your modified adjusted gross income (MAGI) is $100,000 or less ($50,000 or less if married filing separately), you can deduct your loss up to the amount specified above. File 2006 taxes online If your MAGI is more than $100,000 (more than $50,000 if married filing separately), your special allowance is limited to 50% of the difference between $150,000 ($75,000 if married filing separately) and your MAGI. File 2006 taxes online   Generally, if your MAGI is $150,000 or more ($75,000 or more if you are married filing separately), there is no special allowance. File 2006 taxes online More information. File 2006 taxes online   See Publication 925 for more information on the passive loss limits, including information on the treatment of unused disallowed passive losses and credits and the treatment of gains and losses realized on the disposition of a passive activity. File 2006 taxes online How To Report Rental Income and Expenses The basic form for reporting residential rental income and expenses is Schedule E (Form 1040). File 2006 taxes online However, do not use that schedule to report a not-for-profit activity. File 2006 taxes online See Not Rented for Profit, earlier. File 2006 taxes online Providing substantial services. File 2006 taxes online   If you provide substantial services that are primarily for your tenant's convenience, such as regular cleaning, changing linen, or maid service, report your rental income and expenses on Schedule C (Form 1040), Profit or Loss From Business, or Schedule C-EZ (Form 1040), Net Profit From Business (Sole Proprietorship). File 2006 taxes online Substantial services do not include the furnishing of heat and light, cleaning of public areas, trash collection, etc. File 2006 taxes online For information, see Publication 334, Tax Guide for Small Business. File 2006 taxes online You also may have to pay self-employment tax on your rental income using Schedule SE (Form 1040), Self-Employment Tax. File 2006 taxes online   Use Form 1065, U. File 2006 taxes online S. File 2006 taxes online Return of Partnership Income, if your rental activity is a partnership (including a partnership with your spouse unless it is a qualified joint venture). File 2006 taxes online Qualified joint venture. File 2006 taxes online   If you and your spouse each materially participate as the only members of a jointly owned and operated real estate business, and you file a joint return for the tax year, you can make a joint election to be treated as a qualified joint venture instead of a partnership. File 2006 taxes online This election, in most cases, will not increase the total tax owed on the joint return, but it does give each of you credit for social security earnings on which retirement benefits are based and for Medicare coverage if your rental income is subject to self-employment tax. File 2006 taxes online For more information, see Publication 527. File 2006 taxes online Form 1098, Mortgage Interest Statement. File 2006 taxes online    If you paid $600 or more of mortgage interest on your rental property to any one person, you should receive a Form 1098, or similar statement showing the interest you paid for the year. File 2006 taxes online If you and at least one other person (other than your spouse if you file a joint return) were liable for, and paid interest on the mortgage, and the other person received the Form 1098, report your share of the interest on Schedule E (Form 1040), line 13. File 2006 taxes online Attach a statement to your return showing the name and address of the other person. File 2006 taxes online In the left margin of Schedule E, next to line 13, enter “See attached. File 2006 taxes online ” Schedule E (Form 1040) If you rent buildings, rooms, or apartments, and provide basic services such as heat and light, trash collection, etc. File 2006 taxes online , you normally report your rental income and expenses on Schedule E, Part I. File 2006 taxes online List your total income, expenses, and depreciation for each rental property. File 2006 taxes online Be sure to enter the number of fair rental and personal use days on line 2. File 2006 taxes online If you have more than three rental or royalty properties, complete and attach as many Schedules E as are needed to list the properties. File 2006 taxes online Complete lines 1 and 2 for each property. File 2006 taxes online However, fill in lines 23a through 26 on only one Schedule E. File 2006 taxes online On Schedule E, page 1, line 18, enter the depreciation you are claiming for each property. File 2006 taxes online To find out if you need to attach Form 4562, see Form 4562, in chapter 3 of Publication 527. File 2006 taxes online If you have a loss from your rental real estate activity, you also may need to complete one or both of the following forms. File 2006 taxes online Form 6198, At-Risk Limitations. File 2006 taxes online See At-Risk Rules , earlier. File 2006 taxes online Also see Publication 925. File 2006 taxes online Form 8582, Passive Activity Loss Limitations. File 2006 taxes online See Passive Activity Limits , earlier. File 2006 taxes online Page 2 of Schedule E is used to report income or loss from partnerships, S corporations, estates, trusts, and real estate mortgage investment conduits. File 2006 taxes online If you need to use page 2 of Schedule E, be sure to use page 2 of the same Schedule E you used to enter your rental activity on page 1. File 2006 taxes online Also, include the amount from line 26 (Part I) in the “Total income or (loss)” on line 41 (Part V). File 2006 taxes online Worksheet 9-1. File 2006 taxes online Worksheet for Figuring Rental Deductions for a Dwelling Unit Used as a Home Use this worksheet only if you answer “yes” to all of the following questions. File 2006 taxes online Did you use the dwelling unit as a home this year? (See Dwelling Unit Used as a Home . File 2006 taxes online ) Did you rent the dwelling unit at a fair rental price 15 days or more this year? Is the total of your rental expenses and depreciation more than your rental income? PART I. File 2006 taxes online Rental Use Percentage A. File 2006 taxes online Total days available for rent at fair rental price A. File 2006 taxes online       B. File 2006 taxes online Total days available for rent (line A) but not rented B. File 2006 taxes online       C. File 2006 taxes online Total days of rental use. File 2006 taxes online Subtract line B from line A C. File 2006 taxes online       D. File 2006 taxes online Total days of personal use (including days rented at less than fair rental price) D. File 2006 taxes online       E. File 2006 taxes online Total days of rental and personal use. File 2006 taxes online Add lines C and D E. File 2006 taxes online       F. File 2006 taxes online Percentage of expenses allowed for rental. File 2006 taxes online Divide line C by line E     F. File 2006 taxes online   PART II. File 2006 taxes online Allowable Rental Expenses 1. File 2006 taxes online Enter rents received 1. File 2006 taxes online   2a. File 2006 taxes online Enter the rental portion of deductible home mortgage interest and qualified mortgage insurance premiums (see instructions) 2a. File 2006 taxes online       b. File 2006 taxes online Enter the rental portion of real estate taxes b. File 2006 taxes online       c. File 2006 taxes online Enter the rental portion of deductible casualty and theft losses (see instructions) c. File 2006 taxes online       d. File 2006 taxes online Enter direct rental expenses (see instructions) d. File 2006 taxes online       e. File 2006 taxes online Fully deductible rental expenses. File 2006 taxes online Add lines 2a–2d. File 2006 taxes online Enter here and  on the appropriate lines on Schedule E (see instructions) 2e. File 2006 taxes online   3. File 2006 taxes online Subtract line 2e from line 1. File 2006 taxes online If zero or less, enter -0- 3. File 2006 taxes online   4a. File 2006 taxes online Enter the rental portion of expenses directly related to operating or maintaining  the dwelling unit (such as repairs, insurance, and utilities) 4a. File 2006 taxes online       b. File 2006 taxes online Enter the rental portion of excess mortgage interest and qualified mortgage insurance premiums (see instructions) b. File 2006 taxes online       c. File 2006 taxes online Carryover of operating expenses from 2012 worksheet c. File 2006 taxes online       d. File 2006 taxes online Add lines 4a–4c d. File 2006 taxes online       e. File 2006 taxes online Allowable expenses. File 2006 taxes online Enter the smaller of line 3 or line 4d (see instructions) 4e. File 2006 taxes online   5. File 2006 taxes online Subtract line 4e from line 3. File 2006 taxes online If zero or less, enter -0- 5. File 2006 taxes online   6a. File 2006 taxes online Enter the rental portion of excess casualty and theft losses (see instructions) 6a. File 2006 taxes online       b. File 2006 taxes online Enter the rental portion of depreciation of the dwelling unit b. File 2006 taxes online       c. File 2006 taxes online Carryover of excess casualty losses and depreciation from 2012 worksheet c. File 2006 taxes online       d. File 2006 taxes online Add lines 6a–6c d. File 2006 taxes online       e. File 2006 taxes online Allowable excess casualty and theft losses and depreciation. File 2006 taxes online Enter the smaller of  line 5 or line 6d (see instructions) 6e. File 2006 taxes online   PART III. File 2006 taxes online Carryover of Unallowed Expenses to Next Year 7a. File 2006 taxes online Operating expenses to be carried over to next year. File 2006 taxes online Subtract line 4e from line 4d 7a. File 2006 taxes online   b. File 2006 taxes online Excess casualty and theft losses and depreciation to be carried over to next year. File 2006 taxes online  Subtract line 6e from line 6d b. File 2006 taxes online   Worksheet 9-1 Instructions. File 2006 taxes online Worksheet for Figuring Rental Deductions for a Dwelling Unit Used as a Home Caution. File 2006 taxes online Use the percentage determined in Part I, line F, to figure the rental portions to enter on lines 2a–2c, 4a–4b, and 6a–6b of  Part II. File 2006 taxes online Line 2a. File 2006 taxes online Figure the mortgage interest on the dwelling unit that you could deduct on Schedule A as if you had not rented the unit. File 2006 taxes online Do not include interest on a loan that did not benefit the dwelling unit. File 2006 taxes online For example, do not include interest on a home equity loan used to pay off credit cards or other personal loans, buy a car, or pay college tuition. File 2006 taxes online Include interest on a loan used to buy, build, or improve the dwelling unit, or to refinance such a loan. File 2006 taxes online Include the rental portion of this interest in the total you enter on line 2a of the worksheet. File 2006 taxes online   Figure the qualified mortgage insurance premiums on the dwelling unit that you could deduct on line 13 of Schedule A as if you had not rented the unit. File 2006 taxes online See the Schedule A instructions. File 2006 taxes online However, figure your adjusted gross income (Form 1040, line 38) without your rental income and expenses from the dwelling unit. File 2006 taxes online See Line 4b to deduct the part of the qualified mortgage insurance premiums not allowed because of the adjusted gross income limit. File 2006 taxes online Include the rental portion of the amount from Schedule A, line 13, in the total you enter on line 2a of the worksheet. File 2006 taxes online   Note. File 2006 taxes online Do not file this Schedule A or use it to figure the amount to deduct on line 13 of that schedule. File 2006 taxes online Instead, figure the personal portion on a separate Schedule A. File 2006 taxes online If you have deducted mortgage interest or qualified mortgage insurance premiums on the dwelling unit on other forms, such as Schedule C or F, remember to reduce your Schedule A deduction by that amount. File 2006 taxes online           Line 2c. File 2006 taxes online Figure the casualty and theft losses related to the dwelling unit that you could deduct on Schedule A as if you had not rented the dwelling unit. File 2006 taxes online To do this, complete Section A of Form 4684, Casualties and Thefts, treating the losses as personal losses. File 2006 taxes online If any of the loss is due to a federally declared disaster, see the Instructions for Form 4684. File 2006 taxes online On Form 4684, line 17, enter 10% of your adjusted gross income figured without your rental income and expenses from the dwelling unit. File 2006 taxes online Enter the rental portion of the result from Form 4684, line 18, on line 2c of this worksheet. File 2006 taxes online   Note. File 2006 taxes online Do not file this Form 4684 or use it to figure your personal losses on Schedule A. File 2006 taxes online Instead, figure the personal portion on a separate Form 4684. File 2006 taxes online           Line 2d. File 2006 taxes online Enter the total of your rental expenses that are directly related only to the rental activity. File 2006 taxes online These include interest on loans used for rental activities other than to buy, build, or improve the dwelling unit. File 2006 taxes online Also include rental agency fees, advertising, office supplies, and depreciation on office equipment used in your rental activity. File 2006 taxes online           Line 2e. File 2006 taxes online You can deduct the amounts on lines 2a, 2b, 2c, and 2d as rental expenses on Schedule E even if your rental expenses are more than your rental income. File 2006 taxes online Enter the amounts on lines 2a, 2b, 2c, and 2d on the appropriate lines of Schedule E. File 2006 taxes online           Line 4b. File 2006 taxes online On line 2a, you entered the rental portion of the mortgage interest and qualified mortgage insurance premiums you could deduct on Schedule A if you had not rented the dwelling unit. File 2006 taxes online If you had additional mortgage interest and qualified mortgage insurance premiums that would not be deductible on Schedule A because of limits imposed on them, enter on line 4b of this worksheet the rental portion of those excess amounts. File 2006 taxes online Do not include interest on a loan that did not benefit the dwelling unit (as explained in the line 2a instructions). File 2006 taxes online           Line 4e. File 2006 taxes online You can deduct the amounts on lines 4a, 4b, and 4c as rental expenses on Schedule E only to the extent they are not more than the amount on line 4e. File 2006 taxes online *           Line 6a. File 2006 taxes online To find the rental portion of excess casualty and theft losses, use the Form 4684 you prepared for line 2c of this worksheet. File 2006 taxes online   A. File 2006 taxes online Enter the amount from Form 4684, line 10       B. File 2006 taxes online Enter the rental portion of line A       C. File 2006 taxes online Enter the amount from line 2c of this worksheet       D. File 2006 taxes online Subtract line C from line B. File 2006 taxes online Enter the result here and on line 6a of this worksheet               Line 6e. File 2006 taxes online You can deduct the amounts on lines 6a, 6b, and 6c as rental expenses on Schedule E only to the extent they are not more than the amount on line 6e. File 2006 taxes online * *Allocating the limited deduction. File 2006 taxes online If you cannot deduct all of the amount on line 4d or 6d this year, you can allocate the allowable deduction in any way you wish among the expenses included on line 4d or 6d. File 2006 taxes online Enter the amount you allocate to each expense on the appropriate line of Schedule E, Part I. File 2006 taxes online Prev  Up  Next   Home   More Online Publications