1040-US: Schedule E shows a loss for a vacation home

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Question

Why did UltraTax CS allow a loss on Schedule E for my client's vacation home?

Answer

The rental portion of the following direct rental expenses are fully deductible and not limited by the amount of vacation home rental income:

All other types of expenses are treated as expenses directly related to operating or maintain the rental unit and are limited by rental income.

UltraTax CS produces a Vacation Home Worksheet detailing how any allowable loss was calculated. To generate the worksheet, click the Asset tab in the Rent and Royalty folder and choose Setup > Activity. Click the Vacation Home Percentage button and enter the number of days in the Number of days home rented field. Click OK twice to close both dialogs.

Related topic: Vacation home calculations FAQs (1040)

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