I'm talking to a guy who is renting a house below market value, so he knows he can't take deductions in excess of his costs. But apparently because he can deduct mortgage interest and property tax anyway, Turbotax is saying he doesn't get any other deductions and it's telling him he will end up paying tax on the income without any other deductions.
Is that correct? Any ideas?
Thanks.
I believe it works this way: The property is treated as a personal residence. As such, there are no days of rental use. There is no Schedule E. Rental income gets reported on 1040 Line 21. Property taxes and mortgage interest go on Schedule A. All the other rental expenses go on Schedule A as Misc. Itemized Deductions for the production of income subject to the 2% haircut in
2017... nada in 2018.
Perfect. Thanks.
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