Schedule E to "Not-for-profit" rental

No. Not-for-profit rental is not maintained on Schedule E and therefore the depreciation schedule will be forfeited.

When the rental is converted to a not-for-profit, the income is reported on Schedule 1, line 8 as Other Income, not on Schedule E. The expenses can no longer exceed earnings.

However, any mortgage interest expense and real estate taxes would be fully deductible on Schedule A.

To report the gross income in TurboTax, follow these steps, but please see the reference below for how to determine gross income:

• From the left menu, select Federal
• Wages & Income scroll all the way down to Less Common Income and click Show More
• Select the last listed option for Miscellaneous Income 1099-A, 1099-C, click Start
• Next, select the last listed option Other Reportable Income
• Did you receive any other taxable income, click yes
• Other Taxable Income: Enter your description and the amount and click Continue and Done.

See 2019 IRS Publication 927 Residential Rental Property for more information. Page 16: 

Page 6: You stop depreciating property when you retire it from service, even if you haven’t fully recovered its cost or other basis. You retire property from service when you permanently withdraw it from use in a trade or business or from use in the production of income because of any of the following events.
• You sell or exchange the property.
• You convert the property to personal use.
• You abandon the property.
• The property is destroyed.

 

Page 16: If you don’t rent your property to make a profit, you can’t deduct rental expenses in excess of the amount of your rental income. You can’t deduct a loss or carry forward to the next year any rental expenses that are more than your rental income for the year.

Where to report.

Report your not-for-profit rental income on Schedule 1 (Form 1040 or 1040-SR), line 8, or Form 1040-NR, line 21. If you itemize your deductions, include your mortgage interest and mortgage insurance premiums (if you use the property as your main home or second home), real estate taxes, and casualty losses from your not-for-profit rental activity when figuring the amount you can deduct on Schedule A.

See 2019 IRS Publication 535 Business Expenses, Not-for-profit Activities beginning on page 8.

You can determine gross income from any not-for-profit activity by subtracting the cost of goods sold from your gross receipts. However, if you determine gross income by subtracting cost of goods sold from gross receipts, you must do so consistently, and in a manner that follows generally accepted methods of accounting.