rick wintomac wrote:

- quote -

When you wrote "I must rent it at least 200 days to deduct
expenses" you might be pointing to the source of confusion.

Being able to deduct expenses and being able to deduct a
loss are not the same thing. The "10% of rental days
allowed as personal use" is a condition on being able to
deduct a loss from the rental and being able only to deduct
expenses up to the amount of the rental income.

I have not had my coffee this morning, and maybe it shows in
my inability to express myself.

Try this: Unless the personal use of your rental property
is less than 15 days, or 10% or fewer of the number of days
the property is rented at a fair market rent, your *losses*
- if any - will not be allowed as a tax deduction. The
expenses of the rental - already prorated for the number of
days of rental vs. other use - or is it total days in the
year? See Bolton case - will be allowed only to bring your
net rental income down to zero (except for interest and
taxes and casualty losses - a separate issue, see
elsewhere). If your personal use days (but be sure to see
discussion of "maintenance days" elsewhere) are fewer than
15 or less than 10% of the number of days of rental, the
deduction of your expenses apportioned to the rental - if
they're larger than your income - will not be limited to the
amount of your income (this is called "loss not allowed") as
they would be if your personal use days were larger than...

This completely ignores the limitations on passive losses,
which - with a couple of exceptions - will deny you a
current deduction for the rental loss, after it's netted
with all other net passive income and losses, but suspending
the loss until such time - i.e. the future tax year - that
you have passive income or dispose of the property (in a
fully taxable disposition, one in which all the gain if any
would be recognized....

What was the question???

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rick wintomac wrote:

- quote -

It's not clear from your post what the conflict of opinion
centered around, so I'll just quote the Code and let you see
if that's gonna clear up the fuzziness. Here's IRC section
280A, in part:

(1) In general
For purposes of this section, a taxpayer uses a dwelling
unit during the taxable year as a residence if he uses
such unit (or portion thereof) for personal purposes for
a number of days which exceeds the greater of -
(A) 14 days, or
(B) 10 percent of the number of days during such year
for which such unit is rented at a fair rental. For
purposes of subparagraph (B), a unit shall not be
treated as rented at a fair rental for any day for
which it is used for personal purposes.

Also, I'm not really up on the "breeching" of percentages,
so I'll stay away from that topic too.

But, on the subject of personal use days, I am experienced.
I wonder if you are acquainted with the definition of
"maintenance days." They are days that you work on your
property - there are rules for how much and how hard and how
effectively you need to work... - which *don't* count as
personal use days in determining whether you've used the
property "as a residence" during the year, which in turn
determines whether your losses from the property may be
limited to zero.

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After having CPA and PA give conflicting interpretation, I'm
not sure but I think this means that:

If my personal use is 20 days, I must rent it at least 200
days to deduct expenses as a production of income property,
i.e. deductible loss on schedule E.

Is this a valid example of the second condition (2) above,
the 10% not having been breeched but being the greater
number of days?

(The loss of course would be passive loss for me, separate
issue.)

Thanks.

<< ================================================== ===== > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >