How do I zero out short-term rental expenses against income, to carry over loss into next year?

Forum|Forum|1 year ago
March 5, 2025
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We have a property that is partially our vacation home, and partially a short-term rental. In previous years, we've hired a CPA, who told us we could count our expenses for this property against the income from the property, but any losses beyond that income could only be carried forward to a future tax year (rather than counted against this year's other income). I trust my accountant's assessment, but it is coming out completely different in TurboTax, with a substantial loss listed. How do I zero this out, leaving the loss as a carry-forward for next year instead?

Best answer by AmyC

If your personal use days go over the 10% or 14 days rule, then the losses are cancelled out and your CPA was right to not claim the loss. It could be you didn't use the vacation part as much this year and do qualify.

Double check your entries for days rented and days of personal use.

For more, see About Publication 527, Residential Rental Property (Including Rental of Vacation Homes). Page 26 begins the vacation/rental section.

RobertB4444

If you selected that you 'actively participate' in the rental activity then you are allowed to deduct up to $25,000 in losses against your regular income. In order to actively participate in the rental activity you need to actively be making the management decisions for the property. These include

Approving new tenants,
Deciding on rental terms,
Approving capital or repair expenditures, and
Other similar decisions.

If you are actively participating then the system is correct and you should take the loss. If you are just paying a management company to make these decisions for you then you are not actively participating and you need to go back to the rental property and change that entry to make the losses be passive and carried forward.

@drosensweig

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drosensweigAuthor

I appreciate the advice. I do actively manage the Airbnb listing, make repairs, manage the lawn, all sorts of things, though we hire someone to clean between most guests. I wonder why my accountant, though, had told us that the best case scenario tax-wise was cancelling out all the rental income (not having capital losses to count against our jobs). I thought it was a rule for mixed-use properties, since we didn't buy it primarily as an investment.