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Turbo Tax 1040nr

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Turbo Tax 1040nr

Turbo tax 1040nr 9. Turbo tax 1040nr   Rental Income and Expenses Table of Contents Introduction Useful Items - You may want to see: Rental Income Rental ExpensesVacant while listed for sale. Turbo tax 1040nr 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. Turbo tax 1040nr Dividing Expenses Dwelling Unit Used as a Home Reporting Income and Deductions DepreciationChanging your accounting method to deduct unclaimed depreciation. Turbo tax 1040nr 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. Turbo tax 1040nr It also covers the following topics. Turbo tax 1040nr Personal use of dwelling unit (including vacation home). Turbo tax 1040nr Depreciation. Turbo tax 1040nr Limits on rental losses. Turbo tax 1040nr How to report your rental income and expenses. Turbo tax 1040nr If you sell or otherwise dispose of your rental property, see Publication 544, Sales and Other Dispositions of Assets. Turbo tax 1040nr If you have a loss from damage to, or theft of, rental property, see Publication 547, Casualties, Disasters, and Thefts. Turbo tax 1040nr 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. Turbo tax 1040nr See Publication 527, Residential Rental Property, for more information. Turbo tax 1040nr 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. Turbo tax 1040nr Rental income is any payment you receive for the use or occupation of property. Turbo tax 1040nr In addition to amounts you receive as normal rent payments, there are other amounts that may be rental income. Turbo tax 1040nr When to report. Turbo tax 1040nr   If you are a cash-basis taxpayer, you report rental income on your return for the year you actually or constructively receive it. Turbo tax 1040nr You are a cash-basis taxpayer if you report income in the year you receive it, regardless of when it was earned. Turbo tax 1040nr You constructively receive income when it is made available to you, for example, by being credited to your bank account. Turbo tax 1040nr   For more information about when you constructively receive income, see Accounting Methods in chapter 1. Turbo tax 1040nr Advance rent. Turbo tax 1040nr   Advance rent is any amount you receive before the period that it covers. Turbo tax 1040nr 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. Turbo tax 1040nr Example. Turbo tax 1040nr You sign a 10-year lease to rent your property. Turbo tax 1040nr 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. Turbo tax 1040nr You must include $10,000 in your income in the first year. Turbo tax 1040nr Canceling a lease. Turbo tax 1040nr   If your tenant pays you to cancel a lease, the amount you receive is rent. Turbo tax 1040nr Include the payment in your income in the year you receive it regardless of your method of accounting. Turbo tax 1040nr Expenses paid by tenant. Turbo tax 1040nr   If your tenant pays any of your expenses, the payments are rental income. Turbo tax 1040nr Because you must include this amount in income, you can deduct the expenses if they are deductible rental expenses. Turbo tax 1040nr See Rental Expenses , later, for more information. Turbo tax 1040nr Property or services. Turbo tax 1040nr   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. Turbo tax 1040nr   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. Turbo tax 1040nr Security deposits. Turbo tax 1040nr   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. Turbo tax 1040nr 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. Turbo tax 1040nr   If an amount called a security deposit is to be used as a final payment of rent, it is advance rent. Turbo tax 1040nr Include it in your income when you receive it. Turbo tax 1040nr Part interest. Turbo tax 1040nr   If you own a part interest in rental property, you must report your part of the rental income from the property. Turbo tax 1040nr Rental of property also used as your home. Turbo tax 1040nr   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. Turbo tax 1040nr However, you can deduct on Schedule A (Form 1040) the interest, taxes, and casualty and theft losses that are allowed for nonrental property. Turbo tax 1040nr See Personal Use of Dwelling Unit (Including Vacation Home) , later. Turbo tax 1040nr Rental Expenses This part discusses expenses of renting property that you ordinarily can deduct from your rental income. Turbo tax 1040nr 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. Turbo tax 1040nr Depreciation , which you can also deduct from your rental income, is discussed later. Turbo tax 1040nr Personal use of rental property. Turbo tax 1040nr   If you sometimes use your rental property for personal purposes, you must divide your expenses between rental and personal use. Turbo tax 1040nr Also, your rental expense deductions may be limited. Turbo tax 1040nr See Personal Use of Dwelling Unit (Including Vacation Home) , later. Turbo tax 1040nr Part interest. Turbo tax 1040nr   If you own a part interest in rental property, you can deduct expenses that you paid according to your percentage of ownership. Turbo tax 1040nr When to deduct. Turbo tax 1040nr   If you are a cash-basis taxpayer, you generally deduct your rental expenses in the year you pay them. Turbo tax 1040nr Depreciation. Turbo tax 1040nr   You can begin to depreciate rental property when it is ready and available for rent. Turbo tax 1040nr See Placed-in-Service under When Does Depreciation Begin and End in chapter 2 of Publication 527. Turbo tax 1040nr Pre-rental expenses. Turbo tax 1040nr   You can deduct your ordinary and necessary expenses for managing, conserving, or maintaining rental property from the time you make it available for rent. Turbo tax 1040nr Uncollected rent. Turbo tax 1040nr   If you are a cash-basis taxpayer, do not deduct uncollected rent. Turbo tax 1040nr Because you have not included it in your income, it is not deductible. Turbo tax 1040nr Vacant rental property. Turbo tax 1040nr   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. Turbo tax 1040nr However, you cannot deduct any loss of rental income for the period the property is vacant. Turbo tax 1040nr Vacant while listed for sale. Turbo tax 1040nr   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. Turbo tax 1040nr If the property is not held out and available for rent while listed for sale, the expenses are not deductible rental expenses. Turbo tax 1040nr 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. Turbo tax 1040nr Improvements. Turbo tax 1040nr   You must capitalize any expense you pay to improve your rental property. Turbo tax 1040nr 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. Turbo tax 1040nr Betterments. Turbo tax 1040nr   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. Turbo tax 1040nr Restoration. Turbo tax 1040nr   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. Turbo tax 1040nr Adaptation. Turbo tax 1040nr   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. Turbo tax 1040nr Separate the costs of repairs and improvements, and keep accurate records. Turbo tax 1040nr You will need to know the cost of improvements when you sell or depreciate your property. Turbo tax 1040nr The expenses you capitalize for improving your property can generally be depreciated as if the improvement were separate property. Turbo tax 1040nr 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. Turbo tax 1040nr Insurance premiums paid in advance. Turbo tax 1040nr   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. Turbo tax 1040nr You cannot deduct the total premium in the year you pay it. Turbo tax 1040nr Legal and other professional fees. Turbo tax 1040nr   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. Turbo tax 1040nr For example, on your 2013 Schedule E, you can deduct fees paid in 2013 to prepare your 2012 Schedule E, Part I. Turbo tax 1040nr 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. Turbo tax 1040nr Local benefit taxes. Turbo tax 1040nr   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. Turbo tax 1040nr These charges are nondepreciable capital expenditures, and must be added to the basis of your property. Turbo tax 1040nr However, you can deduct local benefit taxes that are for maintaining, repairing, or paying interest charges for the benefits. Turbo tax 1040nr Local transportation expenses. Turbo tax 1040nr    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. Turbo tax 1040nr 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. Turbo tax 1040nr See Publication 587, Business Use of Your Home, for information on determining if your home office qualifies as a principal place of business. Turbo tax 1040nr   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. Turbo tax 1040nr For 2013, the standard mileage rate for business use is 56. Turbo tax 1040nr 5 cents per mile. Turbo tax 1040nr For more information, see chapter 26. Turbo tax 1040nr    To deduct car expenses under either method, you must keep records that follow the rules in chapter 26. Turbo tax 1040nr In addition, you must complete Form 4562, Part V, and attach it to your tax return. Turbo tax 1040nr Rental of equipment. Turbo tax 1040nr   You can deduct the rent you pay for equipment that you use for rental purposes. Turbo tax 1040nr However, in some cases, lease contracts are actually purchase contracts. Turbo tax 1040nr If so, you cannot deduct these payments. Turbo tax 1040nr You can recover the cost of purchased equipment through depreciation. Turbo tax 1040nr Rental of property. Turbo tax 1040nr   You can deduct the rent you pay for property that you use for rental purposes. Turbo tax 1040nr 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. Turbo tax 1040nr Travel expenses. Turbo tax 1040nr   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. Turbo tax 1040nr You must properly allocate your expenses between rental and nonrental activities. Turbo tax 1040nr You cannot deduct the cost of traveling away from home if the primary purpose of the trip was to improve your property. Turbo tax 1040nr You recover the cost of improvements by taking depreciation. Turbo tax 1040nr For information on travel expenses, see chapter 26. Turbo tax 1040nr    To deduct travel expenses, you must keep records that follow the rules in chapter 26. Turbo tax 1040nr   See Rental Expenses in Publication 527 for more information. Turbo tax 1040nr 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. Turbo tax 1040nr 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. Turbo tax 1040nr You cannot deduct depreciation or insurance for the part of the year the property was held for personal use. Turbo tax 1040nr 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). Turbo tax 1040nr Example. Turbo tax 1040nr Your tax year is the calendar year. Turbo tax 1040nr You moved from your home in May and started renting it out on June 1. Turbo tax 1040nr You can deduct as rental expenses seven-twelfths of your yearly expenses, such as taxes and insurance. Turbo tax 1040nr Starting with June, you can deduct as rental expenses the amounts you pay for items generally billed monthly, such as utilities. Turbo tax 1040nr 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. Turbo tax 1040nr 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). Turbo tax 1040nr 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. Turbo tax 1040nr There is no change in the types of expenses deductible for the personal-use part of your property. Turbo tax 1040nr Generally, these expenses may be deducted only if you itemize your deductions on Schedule A (Form 1040). Turbo tax 1040nr You cannot deduct any part of the cost of the first phone line even if your tenants have unlimited use of it. Turbo tax 1040nr You do not have to divide the expenses that belong only to the rental part of your property. Turbo tax 1040nr 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. Turbo tax 1040nr 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. Turbo tax 1040nr 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. Turbo tax 1040nr How to divide expenses. Turbo tax 1040nr   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. Turbo tax 1040nr You can use any reasonable method for dividing the expense. Turbo tax 1040nr It may be reasonable to divide the cost of some items (for example, water) based on the number of people using them. Turbo tax 1040nr 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. Turbo tax 1040nr 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. Turbo tax 1040nr 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. Turbo tax 1040nr 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. Turbo tax 1040nr Where to report. Turbo tax 1040nr   Report your not-for-profit rental income on Form 1040, line 21. Turbo tax 1040nr 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. Turbo tax 1040nr   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. Turbo tax 1040nr You can deduct these expenses only if they, together with certain other miscellaneous itemized deductions, total more than 2% of your adjusted gross income. Turbo tax 1040nr 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. Turbo tax 1040nr 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. Turbo tax 1040nr Only your rental expenses may be deducted on Schedule E (Form 1040). Turbo tax 1040nr Some of your personal expenses may be deductible if you itemize your deductions on Schedule A (Form 1040). Turbo tax 1040nr You must also determine if the dwelling unit is considered a home. Turbo tax 1040nr The amount of rental expenses that you can deduct may be limited if the dwelling unit is considered a home. Turbo tax 1040nr Whether a dwelling unit is considered a home depends on how many days during the year are considered to be days of personal use. Turbo tax 1040nr 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. Turbo tax 1040nr Dwelling unit. Turbo tax 1040nr   A dwelling unit includes a house, apartment, condominium, mobile home, boat, vacation home, or similar property. Turbo tax 1040nr It also includes all structures or other property belonging to the dwelling unit. Turbo tax 1040nr A dwelling unit has basic living accommodations, such as sleeping space, a toilet, and cooking facilities. Turbo tax 1040nr   A dwelling unit does not include property used solely as a hotel, motel, inn, or similar establishment. Turbo tax 1040nr 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. Turbo tax 1040nr Example. Turbo tax 1040nr   You rent a room in your home that is always available for short-term occupancy by paying customers. Turbo tax 1040nr You do not use the room yourself, and you allow only paying customers to use the room. Turbo tax 1040nr The room is used solely as a hotel, motel, inn, or similar establishment and is not a dwelling unit. Turbo tax 1040nr 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. Turbo tax 1040nr When dividing your expenses, follow these rules. Turbo tax 1040nr 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. Turbo tax 1040nr This rule does not apply when determining whether you used the unit as a home. Turbo tax 1040nr Any day that the unit is available for rent but not actually rented is not a day of rental use. Turbo tax 1040nr Example. Turbo tax 1040nr Your beach cottage was available for rent from June 1 through August 31 (92 days). Turbo tax 1040nr 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. Turbo tax 1040nr 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. Turbo tax 1040nr Your family also used the cottage during the last 2 weeks of May (14 days). Turbo tax 1040nr The cottage was not used at all before May 17 or after August 31. Turbo tax 1040nr You figure the part of the cottage expenses to treat as rental expenses as follows. Turbo tax 1040nr The cottage was used for rental a total of 85 days (92 − 7). Turbo tax 1040nr The days it was available for rent but not rented (7 days) are not days of rental use. Turbo tax 1040nr The July weekend (2 days) you used it is rental use because you received a fair rental price for the weekend. Turbo tax 1040nr You used the cottage for personal purposes for 14 days (the last 2 weeks in May). Turbo tax 1040nr The total use of the cottage was 99 days (14 days personal use + 85 days rental use). Turbo tax 1040nr Your rental expenses are 85/99 (86%) of the cottage expenses. Turbo tax 1040nr Note. Turbo tax 1040nr 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. Turbo tax 1040nr Therefore, you had 16 days of personal use and 83 days of rental use for this purpose. Turbo tax 1040nr 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. Turbo tax 1040nr If you have a net loss, you may not be able to deduct all of the rental expenses. Turbo tax 1040nr See Dwelling Unit Used as a Home, next. Turbo tax 1040nr 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. Turbo tax 1040nr 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. Turbo tax 1040nr See What is a day of personal use , later. Turbo tax 1040nr Fair rental price. Turbo tax 1040nr   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. Turbo tax 1040nr 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. Turbo tax 1040nr   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. Turbo tax 1040nr Instead, count it as a day of personal use in applying both (1) and (2) above. Turbo tax 1040nr 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. Turbo tax 1040nr 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). Turbo tax 1040nr However, see Days used as a main home before or after renting , later. Turbo tax 1040nr 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. Turbo tax 1040nr Family includes only your spouse, brothers and sisters, half-brothers and half-sisters, ancestors (parents, grandparents, etc. Turbo tax 1040nr ), and lineal descendants (children, grandchildren, etc. Turbo tax 1040nr ). Turbo tax 1040nr Anyone under an arrangement that lets you use some other dwelling unit. Turbo tax 1040nr Anyone at less than a fair rental price. Turbo tax 1040nr Main home. Turbo tax 1040nr   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. Turbo tax 1040nr Shared equity financing agreement. Turbo tax 1040nr   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. Turbo tax 1040nr Donation of use of property. Turbo tax 1040nr   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. Turbo tax 1040nr Examples. Turbo tax 1040nr   The following examples show how to determine days of personal use. Turbo tax 1040nr Example 1. Turbo tax 1040nr You and your neighbor are co-owners of a condominium at the beach. Turbo tax 1040nr Last year, you rented the unit to vacationers whenever possible. Turbo tax 1040nr The unit was not used as a main home by anyone. Turbo tax 1040nr Your neighbor used the unit for 2 weeks last year; you did not use it at all. Turbo tax 1040nr 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. Turbo tax 1040nr Example 2. Turbo tax 1040nr You and your neighbors are co-owners of a house under a shared equity financing agreement. Turbo tax 1040nr Your neighbors live in the house and pay you a fair rental price. Turbo tax 1040nr 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. Turbo tax 1040nr This is because your neighbors rent the house as their main home under a shared equity financing agreement. Turbo tax 1040nr Example 3. Turbo tax 1040nr You own a rental property that you rent to your son. Turbo tax 1040nr Your son does not own any interest in this property. Turbo tax 1040nr He uses it as his main home and pays you a fair rental price. Turbo tax 1040nr 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. Turbo tax 1040nr Example 4. Turbo tax 1040nr You rent your beach house to Joshua. Turbo tax 1040nr Joshua rents his cabin in the mountains to you. Turbo tax 1040nr You each pay a fair rental price. Turbo tax 1040nr 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. Turbo tax 1040nr Days used for repairs and maintenance. Turbo tax 1040nr   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. Turbo tax 1040nr 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. Turbo tax 1040nr Days used as a main home before or after renting. Turbo tax 1040nr   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. Turbo tax 1040nr Do not count them as days of personal use if: You rented or tried to rent the property for 12 or more consecutive months. Turbo tax 1040nr 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. Turbo tax 1040nr However, this special rule does not apply when dividing expenses between rental and personal use. Turbo tax 1040nr Examples. Turbo tax 1040nr   The following examples show how to determine whether you used your rental property as a home. Turbo tax 1040nr Example 1. Turbo tax 1040nr You converted the basement of your home into an apartment with a bedroom, a bathroom, and a small kitchen. Turbo tax 1040nr You rented the basement apartment at a fair rental price to college students during the regular school year. Turbo tax 1040nr You rented to them on a 9-month lease (273 days). Turbo tax 1040nr You figured 10% of the total days rented to others at a fair rental price is 27 days. Turbo tax 1040nr During June (30 days), your brothers stayed with you and lived in the basement apartment rent free. Turbo tax 1040nr Your basement apartment was used as a home because you used it for personal purposes for 30 days. Turbo tax 1040nr Rent-free use by your brothers is considered personal use. Turbo tax 1040nr Your personal use (30 days) is more than the greater of 14 days or 10% of the total days it was rented (27 days). Turbo tax 1040nr Example 2. Turbo tax 1040nr 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). Turbo tax 1040nr Your sister-in-law stayed in the room, rent free, for the last 3 weeks (21 days) in July. Turbo tax 1040nr You figured 10% of the total days rented to others at a fair rental price is 3 days. Turbo tax 1040nr The room was used as a home because you used it for personal purposes for 21 days. Turbo tax 1040nr That is more than the greater of 14 days or 10% of the 27 days it was rented (3 days). Turbo tax 1040nr Example 3. Turbo tax 1040nr You own a condominium apartment in a resort area. Turbo tax 1040nr You rented it at a fair rental price for a total of 170 days during the year. Turbo tax 1040nr 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. Turbo tax 1040nr Your family actually used the apartment for 10 of those days. Turbo tax 1040nr Therefore, the apartment is treated as having been rented for 160 (170 − 10) days. Turbo tax 1040nr You figured 10% of the total days rented to others at a fair rental price is 16 days. Turbo tax 1040nr Your family also used the apartment for 7 other days during the year. Turbo tax 1040nr You used the apartment as a home because you used it for personal purposes for 17 days. Turbo tax 1040nr That is more than the greater of 14 days or 10% of the 160 days it was rented (16 days). Turbo tax 1040nr Minimal rental use. Turbo tax 1040nr   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. Turbo tax 1040nr See Used as a home but rented less than 15 days , later, for more information. Turbo tax 1040nr Limit on deductions. Turbo tax 1040nr   Renting a dwelling unit that is considered a home is not a passive activity. Turbo tax 1040nr 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. Turbo tax 1040nr 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. Turbo tax 1040nr Any expenses carried forward to the next year will be subject to any limits that apply for that year. Turbo tax 1040nr 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. Turbo tax 1040nr   To figure your deductible rental expenses for this year and any carryover to next year, use Worksheet 9-1. Turbo tax 1040nr Reporting Income and Deductions Property not used for personal purposes. Turbo tax 1040nr   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. Turbo tax 1040nr Property used for personal purposes. Turbo tax 1040nr   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. Turbo tax 1040nr Not used as a home. Turbo tax 1040nr   If you use a dwelling unit for personal purposes, but not as a home, report all the rental income in your income. Turbo tax 1040nr 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 . Turbo tax 1040nr The expenses for personal use are not deductible as rental expenses. Turbo tax 1040nr   Your deductible rental expenses can be more than your gross rental income; however, see Limits on Rental Losses , later. Turbo tax 1040nr Used as a home but rented less than 15 days. Turbo tax 1040nr   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). Turbo tax 1040nr You are not required to report the rental income and rental expenses from this activity. Turbo tax 1040nr The expenses, including qualified mortgage interest, property taxes, and any qualified casualty loss will be reported as normally allowed on Schedule A (Form 1040). Turbo tax 1040nr See the Instructions for Schedule A (Form 1040) for more information on deducting these expenses. Turbo tax 1040nr Used as a home and rented 15 days or more. Turbo tax 1040nr   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. Turbo tax 1040nr 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 . Turbo tax 1040nr The expenses for personal use are not deductible as rental expenses. Turbo tax 1040nr   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. Turbo tax 1040nr You do not need to use Worksheet 9-1. Turbo tax 1040nr   However, if you had a net loss from renting the dwelling unit for the year, your deduction for certain rental expenses is limited. Turbo tax 1040nr To figure your deductible rental expenses and any carryover to next year, use Worksheet 9-1. Turbo tax 1040nr Depreciation You recover the cost of income-producing property through yearly tax deductions. Turbo tax 1040nr You do this by depreciating the property; that is, by deducting some of the cost each year on your tax return. Turbo tax 1040nr 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. Turbo tax 1040nr You cannot simply deduct your mortgage or principal payments, or the cost of furniture, fixtures, and equipment, as an expense. Turbo tax 1040nr You can deduct depreciation only on the part of your property used for rental purposes. Turbo tax 1040nr Depreciation reduces your basis for figuring gain or loss on a later sale or exchange. Turbo tax 1040nr You may have to use Form 4562 to figure and report your depreciation. Turbo tax 1040nr See How To Report Rental Income and Expenses , later. Turbo tax 1040nr Alternative minimum tax (AMT). Turbo tax 1040nr    If you use accelerated depreciation, you may be subject to the AMT. Turbo tax 1040nr 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). Turbo tax 1040nr Claiming the correct amount of depreciation. Turbo tax 1040nr   You should claim the correct amount of depreciation each tax year. Turbo tax 1040nr 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. Turbo tax 1040nr   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. Turbo tax 1040nr S Individual Income Tax Return. Turbo tax 1040nr 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. Turbo tax 1040nr See Claiming the correct amount of depreciation in chapter 2 of Publication 527 for more information. Turbo tax 1040nr Changing your accounting method to deduct unclaimed depreciation. Turbo tax 1040nr   To change your accounting method, you generally must file Form 3115, Application for Change in Accounting Method, to get the consent of the IRS. Turbo tax 1040nr In some instances, that consent is automatic. Turbo tax 1040nr For more information, see chapter 1 of Publication 946. Turbo tax 1040nr Land. Turbo tax 1040nr   You cannot depreciate the cost of land because land generally does not wear out, become obsolete, or get used up. Turbo tax 1040nr The costs of clearing, grading, planting, and landscaping are usually all part of the cost of land and cannot be depreciated. Turbo tax 1040nr More information. Turbo tax 1040nr   See Publication 527 for more information about depreciating rental property and see Publication 946 for more information about depreciation. Turbo tax 1040nr 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. Turbo tax 1040nr You must consider these rules in the order shown below. Turbo tax 1040nr At-risk rules. Turbo tax 1040nr These rules are applied first if there is investment in your rental real estate activity for which you are not at risk. Turbo tax 1040nr This applies only if the real property was placed in service after 1986. Turbo tax 1040nr Passive activity limits. Turbo tax 1040nr 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. Turbo tax 1040nr However, there are exceptions. Turbo tax 1040nr 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. Turbo tax 1040nr Losses from holding real property (other than mineral property) placed in service before 1987 are not subject to the at-risk rules. Turbo tax 1040nr 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. Turbo tax 1040nr 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. Turbo tax 1040nr See Publication 925 for more information. Turbo tax 1040nr Passive Activity Limits In most cases, all rental real estate activities (except those of certain real estate professionals, discussed later) are passive activities. Turbo tax 1040nr 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. Turbo tax 1040nr Limits on passive activity deductions and credits. Turbo tax 1040nr    Deductions or losses from passive activities are limited. Turbo tax 1040nr You generally cannot offset income, other than passive income, with losses from passive activities. Turbo tax 1040nr Nor can you offset taxes on income, other than passive income, with credits resulting from passive activities. Turbo tax 1040nr Any excess loss or credit is carried forward to the next tax year. Turbo tax 1040nr   For a detailed discussion of these rules, see Publication 925. Turbo tax 1040nr    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. Turbo tax 1040nr Real estate professionals. Turbo tax 1040nr   Rental activities in which you materially participated during the year are not passive activities if, for that year, you were a real estate professional. Turbo tax 1040nr For a detailed discussion of the requirements, see Publication 527. Turbo tax 1040nr For a detailed discussion of material participation, see Publication 925. Turbo tax 1040nr 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. Turbo tax 1040nr Instead, follow the rules explained in Personal Use of Dwelling Unit (Including Vacation Home), earlier. Turbo tax 1040nr 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. Turbo tax 1040nr This special allowance is an exception to the general rule disallowing losses in excess of income from passive activities. Turbo tax 1040nr 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. Turbo tax 1040nr Active participation. Turbo tax 1040nr   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. Turbo tax 1040nr Management decisions that may count as active participation include approving new tenants, deciding on rental terms, approving expenditures, and similar decisions. Turbo tax 1040nr Maximum special allowance. Turbo tax 1040nr   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. Turbo tax 1040nr   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. Turbo tax 1040nr 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. Turbo tax 1040nr   Generally, if your MAGI is $150,000 or more ($75,000 or more if you are married filing separately), there is no special allowance. Turbo tax 1040nr More information. Turbo tax 1040nr   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. Turbo tax 1040nr How To Report Rental Income and Expenses The basic form for reporting residential rental income and expenses is Schedule E (Form 1040). Turbo tax 1040nr However, do not use that schedule to report a not-for-profit activity. Turbo tax 1040nr See Not Rented for Profit, earlier. Turbo tax 1040nr Providing substantial services. Turbo tax 1040nr   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). Turbo tax 1040nr Substantial services do not include the furnishing of heat and light, cleaning of public areas, trash collection, etc. Turbo tax 1040nr For information, see Publication 334, Tax Guide for Small Business. Turbo tax 1040nr You also may have to pay self-employment tax on your rental income using Schedule SE (Form 1040), Self-Employment Tax. Turbo tax 1040nr   Use Form 1065, U. Turbo tax 1040nr S. Turbo tax 1040nr Return of Partnership Income, if your rental activity is a partnership (including a partnership with your spouse unless it is a qualified joint venture). Turbo tax 1040nr Qualified joint venture. Turbo tax 1040nr   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. Turbo tax 1040nr 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. Turbo tax 1040nr For more information, see Publication 527. Turbo tax 1040nr Form 1098, Mortgage Interest Statement. Turbo tax 1040nr    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. Turbo tax 1040nr 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. Turbo tax 1040nr Attach a statement to your return showing the name and address of the other person. Turbo tax 1040nr In the left margin of Schedule E, next to line 13, enter “See attached. Turbo tax 1040nr ” Schedule E (Form 1040) If you rent buildings, rooms, or apartments, and provide basic services such as heat and light, trash collection, etc. Turbo tax 1040nr , you normally report your rental income and expenses on Schedule E, Part I. Turbo tax 1040nr List your total income, expenses, and depreciation for each rental property. Turbo tax 1040nr Be sure to enter the number of fair rental and personal use days on line 2. Turbo tax 1040nr If you have more than three rental or royalty properties, complete and attach as many Schedules E as are needed to list the properties. Turbo tax 1040nr Complete lines 1 and 2 for each property. Turbo tax 1040nr However, fill in lines 23a through 26 on only one Schedule E. Turbo tax 1040nr On Schedule E, page 1, line 18, enter the depreciation you are claiming for each property. Turbo tax 1040nr To find out if you need to attach Form 4562, see Form 4562, in chapter 3 of Publication 527. Turbo tax 1040nr If you have a loss from your rental real estate activity, you also may need to complete one or both of the following forms. Turbo tax 1040nr Form 6198, At-Risk Limitations. Turbo tax 1040nr See At-Risk Rules , earlier. Turbo tax 1040nr Also see Publication 925. Turbo tax 1040nr Form 8582, Passive Activity Loss Limitations. Turbo tax 1040nr See Passive Activity Limits , earlier. Turbo tax 1040nr Page 2 of Schedule E is used to report income or loss from partnerships, S corporations, estates, trusts, and real estate mortgage investment conduits. Turbo tax 1040nr 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. Turbo tax 1040nr Also, include the amount from line 26 (Part I) in the “Total income or (loss)” on line 41 (Part V). Turbo tax 1040nr Worksheet 9-1. Turbo tax 1040nr 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. Turbo tax 1040nr Did you use the dwelling unit as a home this year? (See Dwelling Unit Used as a Home . Turbo tax 1040nr ) 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. Turbo tax 1040nr Rental Use Percentage A. Turbo tax 1040nr Total days available for rent at fair rental price A. Turbo tax 1040nr       B. Turbo tax 1040nr Total days available for rent (line A) but not rented B. Turbo tax 1040nr       C. Turbo tax 1040nr Total days of rental use. Turbo tax 1040nr Subtract line B from line A C. Turbo tax 1040nr       D. Turbo tax 1040nr Total days of personal use (including days rented at less than fair rental price) D. Turbo tax 1040nr       E. Turbo tax 1040nr Total days of rental and personal use. Turbo tax 1040nr Add lines C and D E. Turbo tax 1040nr       F. Turbo tax 1040nr Percentage of expenses allowed for rental. Turbo tax 1040nr Divide line C by line E     F. Turbo tax 1040nr   PART II. Turbo tax 1040nr Allowable Rental Expenses 1. Turbo tax 1040nr Enter rents received 1. Turbo tax 1040nr   2a. Turbo tax 1040nr Enter the rental portion of deductible home mortgage interest and qualified mortgage insurance premiums (see instructions) 2a. Turbo tax 1040nr       b. Turbo tax 1040nr Enter the rental portion of real estate taxes b. Turbo tax 1040nr       c. Turbo tax 1040nr Enter the rental portion of deductible casualty and theft losses (see instructions) c. Turbo tax 1040nr       d. Turbo tax 1040nr Enter direct rental expenses (see instructions) d. Turbo tax 1040nr       e. Turbo tax 1040nr Fully deductible rental expenses. Turbo tax 1040nr Add lines 2a–2d. Turbo tax 1040nr Enter here and  on the appropriate lines on Schedule E (see instructions) 2e. Turbo tax 1040nr   3. Turbo tax 1040nr Subtract line 2e from line 1. Turbo tax 1040nr If zero or less, enter -0- 3. Turbo tax 1040nr   4a. Turbo tax 1040nr Enter the rental portion of expenses directly related to operating or maintaining  the dwelling unit (such as repairs, insurance, and utilities) 4a. Turbo tax 1040nr       b. Turbo tax 1040nr Enter the rental portion of excess mortgage interest and qualified mortgage insurance premiums (see instructions) b. Turbo tax 1040nr       c. Turbo tax 1040nr Carryover of operating expenses from 2012 worksheet c. Turbo tax 1040nr       d. Turbo tax 1040nr Add lines 4a–4c d. Turbo tax 1040nr       e. Turbo tax 1040nr Allowable expenses. Turbo tax 1040nr Enter the smaller of line 3 or line 4d (see instructions) 4e. Turbo tax 1040nr   5. Turbo tax 1040nr Subtract line 4e from line 3. Turbo tax 1040nr If zero or less, enter -0- 5. Turbo tax 1040nr   6a. Turbo tax 1040nr Enter the rental portion of excess casualty and theft losses (see instructions) 6a. Turbo tax 1040nr       b. Turbo tax 1040nr Enter the rental portion of depreciation of the dwelling unit b. Turbo tax 1040nr       c. Turbo tax 1040nr Carryover of excess casualty losses and depreciation from 2012 worksheet c. Turbo tax 1040nr       d. Turbo tax 1040nr Add lines 6a–6c d. Turbo tax 1040nr       e. Turbo tax 1040nr Allowable excess casualty and theft losses and depreciation. Turbo tax 1040nr Enter the smaller of  line 5 or line 6d (see instructions) 6e. Turbo tax 1040nr   PART III. Turbo tax 1040nr Carryover of Unallowed Expenses to Next Year 7a. Turbo tax 1040nr Operating expenses to be carried over to next year. Turbo tax 1040nr Subtract line 4e from line 4d 7a. Turbo tax 1040nr   b. Turbo tax 1040nr Excess casualty and theft losses and depreciation to be carried over to next year. Turbo tax 1040nr  Subtract line 6e from line 6d b. Turbo tax 1040nr   Worksheet 9-1 Instructions. Turbo tax 1040nr Worksheet for Figuring Rental Deductions for a Dwelling Unit Used as a Home Caution. Turbo tax 1040nr 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. Turbo tax 1040nr Line 2a. Turbo tax 1040nr Figure the mortgage interest on the dwelling unit that you could deduct on Schedule A as if you had not rented the unit. Turbo tax 1040nr Do not include interest on a loan that did not benefit the dwelling unit. Turbo tax 1040nr 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. Turbo tax 1040nr Include interest on a loan used to buy, build, or improve the dwelling unit, or to refinance such a loan. Turbo tax 1040nr Include the rental portion of this interest in the total you enter on line 2a of the worksheet. Turbo tax 1040nr   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. Turbo tax 1040nr See the Schedule A instructions. Turbo tax 1040nr However, figure your adjusted gross income (Form 1040, line 38) without your rental income and expenses from the dwelling unit. Turbo tax 1040nr See Line 4b to deduct the part of the qualified mortgage insurance premiums not allowed because of the adjusted gross income limit. Turbo tax 1040nr Include the rental portion of the amount from Schedule A, line 13, in the total you enter on line 2a of the worksheet. Turbo tax 1040nr   Note. Turbo tax 1040nr Do not file this Schedule A or use it to figure the amount to deduct on line 13 of that schedule. Turbo tax 1040nr Instead, figure the personal portion on a separate Schedule A. Turbo tax 1040nr 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. Turbo tax 1040nr           Line 2c. Turbo tax 1040nr 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. Turbo tax 1040nr To do this, complete Section A of Form 4684, Casualties and Thefts, treating the losses as personal losses. Turbo tax 1040nr If any of the loss is due to a federally declared disaster, see the Instructions for Form 4684. Turbo tax 1040nr On Form 4684, line 17, enter 10% of your adjusted gross income figured without your rental income and expenses from the dwelling unit. Turbo tax 1040nr Enter the rental portion of the result from Form 4684, line 18, on line 2c of this worksheet. Turbo tax 1040nr   Note. Turbo tax 1040nr Do not file this Form 4684 or use it to figure your personal losses on Schedule A. Turbo tax 1040nr Instead, figure the personal portion on a separate Form 4684. Turbo tax 1040nr           Line 2d. Turbo tax 1040nr Enter the total of your rental expenses that are directly related only to the rental activity. Turbo tax 1040nr These include interest on loans used for rental activities other than to buy, build, or improve the dwelling unit. Turbo tax 1040nr Also include rental agency fees, advertising, office supplies, and depreciation on office equipment used in your rental activity. Turbo tax 1040nr           Line 2e. Turbo tax 1040nr 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. Turbo tax 1040nr Enter the amounts on lines 2a, 2b, 2c, and 2d on the appropriate lines of Schedule E. Turbo tax 1040nr           Line 4b. Turbo tax 1040nr 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. Turbo tax 1040nr 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. Turbo tax 1040nr Do not include interest on a loan that did not benefit the dwelling unit (as explained in the line 2a instructions). Turbo tax 1040nr           Line 4e. Turbo tax 1040nr 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. Turbo tax 1040nr *           Line 6a. Turbo tax 1040nr To find the rental portion of excess casualty and theft losses, use the Form 4684 you prepared for line 2c of this worksheet. Turbo tax 1040nr   A. Turbo tax 1040nr Enter the amount from Form 4684, line 10       B. Turbo tax 1040nr Enter the rental portion of line A       C. Turbo tax 1040nr Enter the amount from line 2c of this worksheet       D. Turbo tax 1040nr Subtract line C from line B. Turbo tax 1040nr Enter the result here and on line 6a of this worksheet               Line 6e. Turbo tax 1040nr 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. Turbo tax 1040nr * *Allocating the limited deduction. Turbo tax 1040nr 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. Turbo tax 1040nr Enter the amount you allocate to each expense on the appropriate line of Schedule E, Part I. Turbo tax 1040nr Prev  Up  Next   Home   More Online Publications
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The Turbo Tax 1040nr

Turbo tax 1040nr Index A Abandonment of home, Abandonment. Turbo tax 1040nr Absence, temporary, Temporary absence. Turbo tax 1040nr Abstract fees, Settlement fees or closing costs. Turbo tax 1040nr Address, change of, Reminders Adjusted basis, Adjusted Basis, Adjusted Basis Definition of, Determining Basis Worksheet 1 to figure, Determining Basis, Worksheet 1. Turbo tax 1040nr Adjusted Basis of Home Sold—Illustrated Example 1 for Peter and Betty Clark, Worksheet 1. Turbo tax 1040nr Adjusted Basis of Home Sold—Illustrated Example 3 for Emily White, Worksheet 1 Instructions. Turbo tax 1040nr Adjusted Basis of Home Sold Adoption Adjusted basis of home for credit claimed, Decreases to Basis Advertising fees, Selling expenses. Turbo tax 1040nr Amount realized, Amount Realized Appraisal fees, Settlement fees or closing costs. Turbo tax 1040nr Architect's fees, Construction. Turbo tax 1040nr Armed forces Ownership and use tests, Members of the uniformed services or Foreign Service, employees of the intelligence community, or employees or volunteers of the Peace Corps. Turbo tax 1040nr Assistance (see Tax help) B Back interest, Settlement fees or closing costs. Turbo tax 1040nr Basis Adjusted basis (see Adjusted basis) Determination of, Determining Basis, Adjusted Basis Other than cost, Basis Other Than Cost Building permit fees, Construction. Turbo tax 1040nr Business use of home, Business Use or Rental of Home, Use test met for business part (with no business use in year of sale). Turbo tax 1040nr C Casualties Amounts spent after to restore damaged property, Increases to Basis Deductible casualty losses, Decreases to Basis Disaster as cause of, Specific event safe harbors. Turbo tax 1040nr Insurance payments for casualty losses, Decreases to Basis Change of address, Reminders Closing costs, Settlement fees or closing costs. Turbo tax 1040nr Commissions, Selling expenses. Turbo tax 1040nr , Settlement fees or closing costs. Turbo tax 1040nr Community property Basis determination, Community property. Turbo tax 1040nr Condemnation Gain exclusion, Home destroyed or condemned. Turbo tax 1040nr Ownership and use test when previous home condemned, Previous home destroyed or condemned. Turbo tax 1040nr Condominiums As main home, Main Home Basis determination, Condominium. Turbo tax 1040nr Construction costs, Construction. Turbo tax 1040nr Built by you, Built by you. Turbo tax 1040nr Cooperative apartments As main home, Main Home Basis determination, Cooperative apartment. Turbo tax 1040nr Ownership and use tests, Cooperative apartment. Turbo tax 1040nr Cost as basis, Cost As Basis Credit reports Cost of obtaining, Settlement fees or closing costs. Turbo tax 1040nr D Date of sale, Date of sale. Turbo tax 1040nr Death Sale due to, Specific event safe harbors. Turbo tax 1040nr Spouse's death before sale, ownership and use tests, Sale of main home by surviving spouse. Turbo tax 1040nr Decreases to basis, Decreases to Basis Depreciation After May 6, 1997, Depreciation after May 6, 1997. Turbo tax 1040nr Home used for business or rental purposes, Decreases to Basis Destroyed homes Gain exclusion, Home destroyed or condemned. Turbo tax 1040nr Ownership and use test when previous home destroyed, Previous home destroyed or condemned. Turbo tax 1040nr Disabilities, individuals with Ownership and use test, Exception for individuals with a disability. Turbo tax 1040nr Disasters, Specific event safe harbors. Turbo tax 1040nr Discharge of qualified principal residence indebtedness, Adjusted Basis Divorce Home received from spouse, Home received from spouse. Turbo tax 1040nr Home transferred to spouse, Transfer to spouse. Turbo tax 1040nr Ownership and use tests, Home transferred from spouse. Turbo tax 1040nr Sale due to, Specific event safe harbors. Turbo tax 1040nr Transfers after July 18, 1984, Transfers after July 18, 1984. Turbo tax 1040nr Transfers before July 19, 1984, Transfers before July 19, 1984. Turbo tax 1040nr Use of home after divorce, Use of home after divorce. Turbo tax 1040nr Doctor's recommendation for sale, Doctor's recommendation safe harbor. Turbo tax 1040nr E Easements, Decreases to Basis Employee of the intelligence community, Employee of the intelligence community. Turbo tax 1040nr Employment Change in place of employment, Change in Place of Employment Payment by employer, when job transfer involved, Payment by employer. Turbo tax 1040nr Energy Conservation subsidies, Decreases to Basis Credit, Decreases to Basis Exclusion of gain, Excluding the Gain, Nonqualified Use Reduced maximum exclusion, Reduced Maximum Exclusion Expatriates, Expatriates. Turbo tax 1040nr F Federal mortgage subsidies Recapture of, Recapturing (Paying Back) a Federal Mortgage Subsidy Figuring gain or loss, Figuring Gain or Loss, More information. Turbo tax 1040nr Fire insurance premiums, Settlement fees or closing costs. Turbo tax 1040nr Foreclosure, Foreclosure or repossession. Turbo tax 1040nr Foreign Service, Foreign Service member. Turbo tax 1040nr Ownership and use tests, Members of the uniformed services or Foreign Service, employees of the intelligence community, or employees or volunteers of the Peace Corps. Turbo tax 1040nr Form 1040 Reporting sale of home, Reporting the Sale Seller-financed mortgages, Seller-financed mortgage. Turbo tax 1040nr Form 1040, Schedule A Real estate taxes, Real estate taxes. Turbo tax 1040nr Form 1040, Schedule D Reporting sale of home, Reporting the Sale Form 1099-S Proceeds from real estate transactions, Date of sale. Turbo tax 1040nr , Form 1099-S. Turbo tax 1040nr , Form 1099-S. Turbo tax 1040nr Form 2119 Sale of home, Adjusted Basis Form 6252 Installment sale income, Installment sale. Turbo tax 1040nr Form 8828 Recapture tax, How to figure and report the recapture. Turbo tax 1040nr Form 8960 Net Investment Income Tax, Net Investment Income Tax (NIIT). Turbo tax 1040nr NIIT, Net Investment Income Tax (NIIT). Turbo tax 1040nr Form 982 Discharge of indebtedness, Adjusted Basis Free tax services, Free help with your tax return. Turbo tax 1040nr Future developments, Future Developments G Gain or loss Basis determination, Determining Basis, Adjusted Basis Exclusion of gain, Excluding the Gain Exclusion of gain, nonqualified use, Nonqualified Use Gain on sale, Gain on sale. Turbo tax 1040nr Loss on sale, Loss on sale. Turbo tax 1040nr Postponed from sale of previous home before May 7, 1997, Decreases to Basis Worksheet 2 to figure, Worksheet 2. Turbo tax 1040nr Taxable Gain on Sale of Home—Completed Example 1 for Amy, Worksheet 1. Turbo tax 1040nr Adjusted Basis of Home Sold—Illustrated Example 1 for Peter and Betty Clark, Worksheet 2. Turbo tax 1040nr Taxable Gain on Sale of Home—Illustrated Example 2 for Peter and Betty Clark, Worksheet 2. Turbo tax 1040nr Taxable Gain on Sale of Home—Illustrated Example 3 for Emily White, Worksheet 2. Turbo tax 1040nr Taxable Gain on Sale of Home Gifts Home received as, Home received as gift. Turbo tax 1040nr H Health Sale of home due to, Health Help (see Tax help) Homebuyer credit Recapture, Recapture of the post-2008 first-time homebuyer credit. Turbo tax 1040nr Houseboats As main home, Main Home I Important reminders Change of address, Reminders Home sold with undeducted points, Reminders Improvements Adjusted basis determination, Improvements. Turbo tax 1040nr Charges for, Settlement fees or closing costs. Turbo tax 1040nr Receipts and other records, Adjusted Basis Useful life of more than 1 year, Increases to Basis Increases to basis, Increases to Basis Individual taxpayer identification numbers (ITINs), Individual taxpayer identification number (ITIN). Turbo tax 1040nr Inheritance Home received as, Home acquired from a decedent who died before or after 2010. Turbo tax 1040nr Installment sales, Installment sale. Turbo tax 1040nr Involuntary conversion, Specific event safe harbors. Turbo tax 1040nr ITINs (Individual taxpayer identification numbers), Individual taxpayer identification number (ITIN). Turbo tax 1040nr J Joint owners not married, Joint owners not married. Turbo tax 1040nr Joint returns, Jointly owned home. Turbo tax 1040nr Ownership and use tests, Married Persons L Land Sale of land on which home located, Land. Turbo tax 1040nr Sale of vacant land, Vacant land. Turbo tax 1040nr Legal fees, Selling expenses. Turbo tax 1040nr , Settlement fees or closing costs. Turbo tax 1040nr , Construction. Turbo tax 1040nr Legal separation Sale due to, Specific event safe harbors. Turbo tax 1040nr Like-kind exchange, Sale of home acquired in a like-kind exchange. Turbo tax 1040nr Living expenses, Reasonable basic living expenses. Turbo tax 1040nr Loan assumption fees, Settlement fees or closing costs. Turbo tax 1040nr Loan placement fees, Selling expenses. Turbo tax 1040nr Loss (see Gain or loss) M Main home Defined, Main Home Factors used to determine, Factors used to determine main home. Turbo tax 1040nr Property used partly as, Property used partly as your main home. Turbo tax 1040nr , Property Used Partly for Business or Rental Married taxpayers (see Joint returns) Maximum exclusion, Maximum Exclusion Reduced, Reduced Maximum Exclusion Military (see Armed forces) Missing children, photographs of, Reminders Mobile homes As main home, Main Home More than one home, More than one home. Turbo tax 1040nr Mortgage fees, Settlement fees or closing costs. Turbo tax 1040nr Mortgage insurance premiums, Settlement fees or closing costs. Turbo tax 1040nr Mortgage subsidies Recapturing (paying back) federal mortgage subsidy, Recapturing (Paying Back) a Federal Mortgage Subsidy Mortgages, seller-financed, Seller-financed mortgage. Turbo tax 1040nr Moving expense, Settlement fees or closing costs. Turbo tax 1040nr Multiple births Sale due to, Specific event safe harbors. Turbo tax 1040nr N Nonqualified use, Nonqualified Use Nonresident aliens Spouse as, transfer of home to, Exception. Turbo tax 1040nr O Option to buy home, Option to buy. Turbo tax 1040nr Ownership and use tests, Ownership and Use Tests, Ownership and use tests met at different times. Turbo tax 1040nr P Partly used for business, Property Used Partly for Business or Rental Personal property Selling price of home not to include, Personal property. Turbo tax 1040nr Points, Selling expenses. Turbo tax 1040nr Home sold with undeducted points, Reminders Seller-paid, Seller-paid points. Turbo tax 1040nr Publications (see Tax help) R Real estate taxes, Settlement fees or closing costs. Turbo tax 1040nr , Real estate taxes. Turbo tax 1040nr Deducting in year of sale, Deducting Taxes in the Year of Sale Recapture of federal mortgage subsidy, Recapturing (Paying Back) a Federal Mortgage Subsidy Recapture of first-time homebuyer credit, Recapture of First-Time Homebuyer Credit Recording fees, Settlement fees or closing costs. Turbo tax 1040nr Recordkeeping, Adjusted Basis Reduced maximum exclusion, Reduced Maximum Exclusion Worksheet 3, Worksheet 3. Turbo tax 1040nr Reduced Maximum Exclusion Refinancing, Settlement fees or closing costs. Turbo tax 1040nr Relatives Sale of home to, Exception for sales to related persons. Turbo tax 1040nr Remainder interest Sale of, Sale of remainder interest. Turbo tax 1040nr Remodeling, Improvements. Turbo tax 1040nr , Exception. Turbo tax 1040nr (see also Improvements) Rental of home, Business Use or Rental of Home, Use test met for business part (with no business use in year of sale). Turbo tax 1040nr Before closing, by buyer, Settlement fees or closing costs. Turbo tax 1040nr Partial use, Property Used Partly for Business or Rental Repairs, Settlement fees or closing costs. Turbo tax 1040nr , Improvements. Turbo tax 1040nr , Repairs. Turbo tax 1040nr (see also Improvements) Reporting the sale, Reporting the Sale, Worksheet 2. Turbo tax 1040nr Taxable Gain on Sale of Home—Illustrated Example 3 for Emily White Repossession, Foreclosure or repossession. Turbo tax 1040nr Right-of-ways, Decreases to Basis S Safe harbors Distance safe harbor, Distance safe harbor. Turbo tax 1040nr Doctor's recommendation for sale, Doctor's recommendation safe harbor. Turbo tax 1040nr Unforeseeable events, Specific event safe harbors. Turbo tax 1040nr Sales commissions, Selling expenses. Turbo tax 1040nr , Settlement fees or closing costs. Turbo tax 1040nr Sales to related persons, Exception for sales to related persons. Turbo tax 1040nr Self-employed persons Change in status causing inability to pay basic expenses, Specific event safe harbors. Turbo tax 1040nr Seller-financed mortgages, Seller-financed mortgage. Turbo tax 1040nr Seller-paid points, Seller-paid points. Turbo tax 1040nr Selling expenses, Selling expenses. Turbo tax 1040nr Selling price, Selling Price Separate returns, Separate returns. Turbo tax 1040nr Settlement fees, Settlement fees or closing costs. Turbo tax 1040nr Spouse Death of (see Surviving spouse) Divorce, transfers subsequent to (see Divorce) Survey fees, Settlement fees or closing costs. Turbo tax 1040nr Surviving spouse Basis determination, Surviving spouse. Turbo tax 1040nr Ownership and use tests, Sale of main home by surviving spouse. Turbo tax 1040nr T Tax help, How To Get Tax Help Temporary absence, Temporary absence. Turbo tax 1040nr Temporary housing, Temporary housing. Turbo tax 1040nr Title insurance, Settlement fees or closing costs. Turbo tax 1040nr Title search fees, Settlement fees or closing costs. Turbo tax 1040nr Trading homes, Trading (exchanging) homes. Turbo tax 1040nr , Home received as trade. Turbo tax 1040nr Transfer taxes, Settlement fees or closing costs. Turbo tax 1040nr , Transfer taxes. Turbo tax 1040nr Transfer to spouse, Transfer to spouse. Turbo tax 1040nr After July 18, 1984, Transfers after July 18, 1984. Turbo tax 1040nr Before July 19, 1984, Transfers before July 19, 1984. Turbo tax 1040nr TTY/TDD information, How To Get Tax Help U Unemployment, Specific event safe harbors. Turbo tax 1040nr Unforeseen circumstances, Unforeseen Circumstances Uniformed services (see Armed forces) Use tests, Ownership and Use Tests, Ownership and use tests met at different times. Turbo tax 1040nr Utilities Charges for installing, Settlement fees or closing costs. Turbo tax 1040nr Charges related to occupancy of house before closing, Settlement fees or closing costs. Turbo tax 1040nr Energy conservation subsidy, Decreases to Basis Meter and connection charges for construction, Construction. Turbo tax 1040nr V Vacant land Sale of, Vacant land. Turbo tax 1040nr W Worksheets, Worksheets. Turbo tax 1040nr Adjusted basis (Worksheet 1), Determining Basis, Worksheet 1. Turbo tax 1040nr Adjusted Basis of Home Sold—Illustrated Example 1 for Peter and Betty Clark, Worksheet 1. Turbo tax 1040nr Adjusted Basis of Home Sold—Illustrated Example 3 for Emily White, Worksheet 1 Instructions. Turbo tax 1040nr Adjusted Basis of Home Sold Gain (or loss), exclusion, and taxable gain (Worksheet 2), Worksheet 2. Turbo tax 1040nr Taxable Gain on Sale of Home—Completed Example 1 for Amy, Worksheet 1. Turbo tax 1040nr Adjusted Basis of Home Sold—Illustrated Example 1 for Peter and Betty Clark, Worksheet 2. Turbo tax 1040nr Taxable Gain on Sale of Home—Illustrated Example 2 for Peter and Betty Clark, Worksheet 2. Turbo tax 1040nr Taxable Gain on Sale of Home—Illustrated Example 3 for Emily White, Worksheet 2. Turbo tax 1040nr Taxable Gain on Sale of Home Recordkeeping and, Adjusted Basis Reduced maximum exclusion (Worksheet 3), Worksheet 3. Turbo tax 1040nr Reduced Maximum Exclusion Prev  Up     Home   More Online Publications