Follow these steps to enter vacation home expenses:
- Go to Screen 18, Rental & Royalty Income (Schedule E).
- Select Vacation/Short-Term Rental from the Type of Property dropdown.
- Enter the Number of days rented.
- Scroll down to the Income section.
- Enter the amount received in Rents or royalties received.
- Scroll down to the Expenses section.
- Enter the applicable expenses in the Direct or Indirect columns.
- Expenses entered in the Direct column can calculate a loss or gain and should only be entered for the rental part of the property.
- Expenses entered in the Indirect column won't calculate a loss or gain and should be entered for the vacation home part of the property.
- Scroll down to the Personal Use of Dwelling Unit (Including Vacation Home section.
- Enter the Number of days personal use.
- Enter the Number of days owned (if optional method elected).
- To apply an optional business use percentage only to indirect mortgage interest and real estate taxes, enter the number of days that the vacation home was owned. This entry becomes the denominator when calculating the percentage of business use to apply to indirect mortgage interest and real estate taxes.
- Complete all other applicable information for this rental.
For vacation home purposes, Lacerte calculates percentage of business use by dividing the number of days rented by the sum of the number of days rented plus the number of days of personal use. The program applies this percentage to all indirect expenses, including indirect mortgage interest and real estate taxes.
You must enter at least 15 days personal use for Lacerte to calculate vacation home expenses. If the taxpayer used the home for fewer than 15 days personal use, enter applicable taxes and interest on Screen 25, Itemized Deductions.