"Stuart O. Bronstein" <
spamtrap@lexregia.com> wrote in news:
XnsAFD7AE1B2121Davocatstuyahoofr@130.133.4.11:
Boris <nospam@invalid.com> wrote:
A google search finds this:
"Fair rental days" are the number of days your home was actually
rented by a party, not the total number of days it was available
to rent. As a supplement to Form 1040, Form Schedule E asks about
fair rental days to determine if your property is considered a
business or a residence in the eyes of the IRS."
This quote is from a website that just gives someone's opinion,
without any supporting documentation.
This comment is off topic, but I always wondered why there was never any attribution to google searches that provide those types of results. I
really don't care for those types of results. Thanks.
I think it's wrong. Yes, it
may be considered a hobby rather than a business if you use it for
more than 10% of the days it's actually rented out. But that doesn't
mean that the days you are holding it open for rent are days for
personal use.
A search at irs.gov finds this:
https://www.irs.gov/taxtopics/tc415
"Dividing Expenses between Rental and Personal Use"
"If you use the dwelling unit for both rental and personal
purposes, you generally must divide your total expenses between
the rental use and the personal use based on the number of days
used for each purpose."
As far as I'm concerned, if you had the property up for rent for all
the days you weren't using it, (and you don't use it very many days comparatively) when no one is staying there but you are marketing it
and wanting to find people to stay there during those days, you are
using it for rental purposes, even if not actually renting it out.
2015-2018, this preparer used days rented
2019-2021, new preparer used days rented
2022, current preparer is using days available for rent
From the above, it appears that the current preparer is incorrect.
He hasn't replied yet, so let's see what he has to say.
It doesn't look to me that this issue is open to opinion by the
IRS. Looks like it's calculated so the IRS gets the most in taxes.
You can do it the safe way if you like. When you do that you also
lose depreciation. But if the IRS decides that days that the place
was for rent but not rented were actually for rental purposes, they
will require you to recapture depreciation for those days anyway,
even if you actually never took that depreciation.
Past preparers have always done it the 'safe' way, and I've always taken depreciation.
Here is my preparer's reply:
"The prior years were prepared correctly. They used the standard method
of calculating business vs personal use allocations. Because you used the property so few days for personal use I decided to treat it like we would
if there were no personal use days. In that event, all days the property
was available to rent even if not rented are considered as if rented. It
is a slightly more aggressive approach but I've never heard of it being questioned by the IRS. If you would be more comfortable with the standard approach I can certainly modify the Schedule E."
Ok. I get it.
During all years, the property was available for use except for the days
it was used for my private use...for repairs, cleaning, etc. All other
365/366 days of the year, it was posted and available for rent.
Also, in all years, including this year, depreciation was taken.
Using the 'safe' method, (private use divided by (actual occupied rental
+ private use)), prior years private use has always between 28% and 15%.
For 2022, the 'safe' method gives a private use of 14%, and the
'aggressive' method gives a private use of 7%, so I see this preparer's thinking.
I think I'll just approve his method, as either way costs me nothing, and depreciation is taken.
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