If you use your dwelling unit for both rental and personal purposes, divide your expenses between the rental use and the personal use based on the number of days used for each purpose.

You will allocate your expenses based on the number of personal days as compared to the number of rental days. The personal portion of expenses, including qualified mortgage interest, property taxes, and qualified casualty loss (if any), will be reported as normally allowed on Schedule A. The rental portion of the expenses will be reported on Schedule E.

See IRS Publication 527 Residential Rental Property for more information.

To enter your rental expenses in TaxAct®:

1. From within your TaxAct return (Online or Desktop) click Federal. On smaller devices, click in the upper left-hand corner, then select Federal.
2. Click Rent or Royalty Income in the Federal Quick Q&A Topics menu to expand the category and then click Real estate rental income
3. Click New Copy of Federal Schedule E (Desktop users click Add) to create a new schedule, or click Review to review a schedule already created.
4. The program will proceed with the interview questions for you to enter or review the information that will be reported on Schedule E

To enter your personal expenses in TaxAct:

1. From within your TaxAct return (Online or Desktop) click Federal. On smaller devices, click in the upper left-hand corner, then select Federal. 
2. Click Itemized or Standard Deductions in the Federal Quick Q&A Topics menu to expand the category and then click the appropriate topic:
   • To enter property taxes, click Taxes paid and continue to the screen titled Enter real estate taxes assessed and paid in 2018
   • To enter qualified casualty loss, click Casualty or theft losses
   • To enter mortgage interest, click Interest expenses
3. The program will proceed with the interview questions for you to enter or review the information that will be reported on Schedule A

Additional Information

The allocation of expenses between rental and personal must always be done by hand and entered on the appropriate schedule (A or E).

If the rental property produces a loss, the Vacation Home Limitation Worksheet may limit the amount of rental expenses that were entered on Schedule E (not the personal portion which was entered on Schedule A). This calculation is reflected on Line 21 of Schedule E. If the mortgage interest or real estate taxes entered on Schedule E are limited by this worksheet, the amount not allowed to be deducted on the Schedule E will transfer to Schedule A to be taken as an itemized deduction (along with the personal portion already entered on Schedule A).

If the rental property produces a gain, the full amount of rental expenses (not the personal portion which is entered on Schedule A) will be allowed to be deducted on Schedule E. The correct amounts will be reflected on the Schedule E. The Vacation Home Limitation Worksheet is not applicable in that situation, so no amounts should be transferred to Schedule A from Schedule E.