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Rental of portion of home - IRC Sec 280A limitation

mncpa5354
Level 1

Question re Lacerte reporting for rental income for a portion of your home, such as roommates when one party owns the home and charges rent?  IRC Sec 280A limits any loss.  Different than vacation home since home owner and renter are both present year round.  Not sure how to report in Lacerte.

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itonewbie
Level 14

The room appurtenant to the home is not a dwelling unit on its own by definition under §280A.  Since the home, as a dwelling unit, was used by your client as a residence, except a room of which was let out, §280A should apply.

You would enter that in Lacerte as a vacation home.  Property type could be "Room rental", instead of choosing one of those standard options.  I'd use 365 for both rental and rental days, enter the decimals for Percentage of business use (.xxxx) [Override] but check that indirect expenses and depreciation are properly allocated to the room.

[Edit: Percentage of tenant occupancy if not 100% (.xxxx) doesn't work well because Lacerte will first apply the rental day ratio (365 / 365 x 2) before applying the tenant occupancy percentage.]

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Farewell AllStars, Hello Level 14! After all, what is life without numbers for a tax pro?
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