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 (Form 1040) Itemized Deductions. The rental portion of the expenses will be reported on Schedule E (Form 1040) Supplemental Income and Loss.

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 click Federal.
2. Click Rent or Royalty Income in the Federal Quick Q&A Topics menu to expand, then click Real estate rental income.
3. Click + Add Schedule E, Pg 1 to create a new copy of the form or click Edit to review a form already created.
4. Continue with the interview process to enter all of the appropriate information for 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 click Federal.
2. Click Itemized or Standard Deductions in the Federal Quick Q&A Topics menu to expand, then click the appropriate topic:
   • To enter property taxes: Click All itemized deductions topics, click Review on the "Real estate taxes" row, then continue.
   • To enter qualified casualty loss: click Casualty or theft losses, click Yes, then continue.
   • To enter mortgage interest, click Interest expenses, click Yes, then continue.
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 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.

Note that any link in the information above is updated each year automatically and will take you to the most recent version of the document at the time it is accessed.