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Back tax relief Index A Alternative annuity option How to report, How to report. Back tax relief Lump-sum payment, Alternative Annuity Option Annual leave, Annual leave. Back tax relief Annuity Starting date, Annuity starting date. Back tax relief Statement, Annuity statement. Back tax relief With survivor benefit, CSRS or FERS Survivor Annuity Without survivor benefit, Choosing a survivor annuity after retirement. Back tax relief Assistance (see Tax help) B Benefits, how to report, How To Report Benefits C Child's temporary annuity, Surviving spouse with child. Back tax relief Community property laws, Community property laws. Back tax relief Contributions, refund of, Refund of Contributions Cost (contributions to retirement plan), Your cost. Back tax relief Credit for the elderly or the disabled, Credit for the Elderly or the Disabled D Death benefit, FERS Death Benefit Deduction for estate tax, Income Tax Deduction for Estate Tax Paid Disability retirement, Part III Rules for Disability Retirement and Credit for the Elderly or the Disabled Disabled child, Disabled child. Back tax relief Distributions Qualified domestic relations order (QDRO), Qualified domestic relations order (QDRO). Back tax relief Withholding from TSP payments, Withholding from certain lump-sum payments. Back tax relief E Estate tax, Federal Estate Tax, Income Tax Deduction for Estate Tax Paid Estimated tax, Tax Withholding and Estimated Tax, Estimated tax. Back tax relief F Federal Employees' Compensation Act (FECA), Federal Employees' Compensation Act (FECA). Back tax relief Filing requirements, Filing Requirements Form 1099-R, Withholding from Thrift Savings Plan payments. Back tax relief CSA 1099R, Form CSA 1099R. Back tax relief CSF 1099R, Form CSF 1099R. Back tax relief W-4P-A, Withholding certificate. Back tax relief Free tax services, Free help with your tax return. Back tax relief G General Rule, General Rule, General Rule. Back tax relief Gift tax, Federal Gift Tax H Help (see Tax help) I Income in respect of a decedent, Income Tax Deduction for Estate Tax Paid Income tax withholding, Tax Withholding and Estimated Tax, Withholding. Back tax relief L Lump-sum CSRS or FERS payment, Lump-Sum CSRS or FERS Payment, Lump-Sum CSRS or FERS Payment Lump-sum payment Alternative annuity option, Alternative Annuity Option Installments, Lump-sum payment in installments. Back tax relief Withholding, Withholding from certain lump-sum payments. Back tax relief M Mandatory retirement age, Mandatory retirement age. Back tax relief Marital deduction, Marital deduction. Back tax relief Minimum retirement age, Minimum retirement age. Back tax relief N Nonresident alien retiree, Nonresident Aliens P Permanently and totally disabled, Permanently and totally disabled. Back tax relief Physician's statement, Physician's statement. Back tax relief Public safety officers Dependents, Dependents of public safety officers. Back tax relief Insurance premiums, Distributions Used To Pay Insurance Premiums for Public Safety Officers Survivors, Survivors of Slain Public Safety Officers Publications (see Tax help) Q Qualified domestic relations order (QDRO), Qualified domestic relations order (QDRO). Back tax relief R Reemployment after retirement, Reemployment After Retirement Refund of contributions, Refund of Contributions Retirees, rules for, Part II Rules for Retirees Retirement during the past year, Retirement During the Past Year Rollovers Nonspouse beneficiary, Rollovers by nonspouse beneficiary. Back tax relief Rollover rules, Rollover Rules To Roth IRAs, Rollovers to Roth IRAs Roth Thrift Savings Plan, Roth TSP balance. Back tax relief S Simplified Method, Simplified Method, Simplified Method. Back tax relief Substantial gainful activity, Permanently and totally disabled. Back tax relief Survivor annuity, Choosing a survivor annuity after retirement. Back tax relief , CSRS or FERS Survivor Annuity, CSRS or FERS Survivor Annuity Survivors of federal employees, Part IV Rules for Survivors of Federal Employees Survivors of federal retirees, Part V Rules for Survivors of Federal Retirees T Tax help, How To Get Tax Help Thrift Savings Plan, Thrift Savings Plan. Back tax relief , Thrift Savings Plan Roth option, Roth TSP balance. Back tax relief TTY/TDD information, How To Get Tax Help U Uniformed services Thrift Savings Plan, Reminders Unused annual leave, Payment for unused annual leave. Back tax relief V Voluntary contributions, Voluntary contributions. Back tax relief , Voluntary contributions. Back tax relief , Voluntary Contributions W Withholding certificate, Withholding certificate. Back tax relief Withholding of income tax, Tax Withholding and Estimated Tax, Withholding. Back tax relief Worksheets Lump-sum payment at end of survivor annuity, Lump-sum payment at end of survivor annuity. Back tax relief Lump-sum payment to the estate or other beneficiary, Lump-Sum CSRS or FERS Payment Nonresident alien retiree, Nonresident Aliens Simplified Method, Worksheet A. Back tax relief Simplified Method Prev  Up     Home   More Online Publications
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Section 7216 Information Center

Final Treasury Regulations on rules and consent requirements relating to the disclosure or use of tax return information by tax return preparers became effective Dec. 28, 2012. For additional information about how these apply to services and education related to the Affordable Care Act, please see our questions and answers.

 For further information, see Rev Proc 2013-14 and Rev Proc 2013-19

On December 30, 2009, the IRS issued proposed and temporary regulations (effective January 4, 2010) and related revenue rulings addressing the use or disclosure of tax return information by tax return preparers. The regulations and related revenue rulings under section 7216 enable tax return preparers to more effectively provide a range of services that taxpayers would ordinarily expect from tax return preparers.

Notice of Proposed Rulemaking by Cross-Reference to Temporary Regulations Amendments to the Section 7216 Regulations—Disclosure or Use of Information by Preparers of Returns

Revision to Section 301.7216-2 Guidance

Description of the Guidance:
These final and temporary regulations provide updated guidance regarding the disclosure and use of tax return information by tax return preparers without taxpayer consent. These regulations expand the information tax return preparers may compile, maintain, and use in lists for solicitation of tax return business under section 301.7216-2(n) to include taxpayer entity classification or type and tax return form number. These regulations clarify that the section 301.7216-2(n) lists may not be used to solicit non-tax return preparation services.  These regulations also clarify the phrase “tax information” in section 301.7216-2(n) by replacing that phrase with “tax information and general business or economic analysis for educational purposes.  These regulations further clarify that due diligence performed in contemplation of a sale or other disposition of a tax return preparation business is “in connection with” the sale or other disposition of the section 301.7216-2(n) list compiler’s tax return business” and that tax return information made available for due diligence purposes is a disclosure of that information, not a transfer of that information.  These regulations adopt the guidance provided in Notice 2009-13 related to section 301.7216-2(p) allowing certain expanded disclosures and uses of statistical compilations, subject to specific prohibitions, provided that the statistical compilations are anonymous as to taxpayer identity and contain data from at least 10 tax returns. Finally, these regulations allow the disclosure of tax return information to the extent necessary to accomplish required legal or ethical conflict reviews to avoid client conflicts of interest.  These regulations also include specific restrictions and prohibitions applicable to the expanded uses and disclosures that are designed to appropriately balance taxpayer rights provided by section 7216 and its regulations without compromising those rights.

Revenue Ruling 2010-4

(Provides guidance on whether a tax return preparer is liable for criminal and civil penalties under Internal Revenue Code sections 7216 and 6713 when the tax return preparer uses tax return information to contact taxpayers to inform them of changes in tax law that could affect the taxpayers’ income tax liability reported in tax returns previously prepared or processed by the tax return preparer; uses tax return information to determine which taxpayers’ future income tax return filing obligations may be affected by a prospective change in tax rule or regulation and to contact such taxpayers to notify them of the changed rule or regulation, explain how the change may affect them, and advise them with regard to actions they may take in response to the change; or discloses tax return information contained in the list permitted to be maintained by the tax return preparer under section 301.7216-2(n) to a third-party service provider that creates, publishes, or distributes, by mail or e-mail, tax information and general business and economic information or analysis for educational purposes or for purposes of soliciting additional tax return preparation services for the tax return preparer, for the purpose of obtaining the ‘newsletter’ creation, publication, and or distribution services offered by the third-party service provider.)

Revenue Ruling 2010-5

(Provides guidance on whether a tax return preparer is liable for criminal and civil penalties under Internal Revenue Code sections 7216 and 6713 when the tax return preparer discloses (1) to a professional liability insurance carrier tax return information required by the insurance carrier to obtain or maintain professional liability insurance coverage; (2) to a professional liability insurance carrier tax return information required by the insurance carrier to promptly and accurately report a claim or a potential claim against the tax return preparer, or to aid in the investigation of a claim or potential claim against the tax return preparer; (3) to a professional liability insurance carrier tax return information to the preparer’s professional liability insurance carrier in order to obtain legal representation under the terms of the insurance policy; or (4) tax return information to an unrelated attorney for the purpose of evaluating a claim or potential claim against the tax return preparer.)

News Releases:

IRS Issues Proposed Regulations Adjusting Use of Some Taxpayer Information (Released December 30, 2009)

How Do I?

Section 7216 Frequently Asked Questions

Aids to Preparing Section 7216 Consent Forms

Archived Information:

Section 7216 Updated Rules for Tax Preparers (Updated 12/18/2008)

Page Last Reviewed or Updated: 27-Feb-2014

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