Sch E: Days rented must be greater than or equal to 15

[StephanB]

I am getting the above message because we purchased a rental property in late 2020, and only have 7 rental days for the year.

if "the income and expenses should not be reported on this schedule", then where and how do I record them in TurboTax?

[M-MTax]

Don't put any personal days in there if you had only rental use for the year.....personal days should be zero.

[Carl]

Rental Property Dates & Numbers That Matter.

Date of Conversion - If this was your primary residence or 2^nd home before, then this date is the day AFTER you moved out, or the date you decided to lease the property – whichever is later.
In Service Date - This is the date a renter "could" have moved in. Usually, this date is the day you put the FOR RENT sign in the front yard.
Number of days Rented - the day count for this starts from the first day a renter "could" have moved in. That should be your "in service" date if you were asked for that. Vacant periods between renters count also PROVIDED you did not live in the house for one single day for any type of personal pleasure use during said period of vacancy.
Days of Personal Use - This number will be a big fat ZERO. Read the screen. It's asking for the number of days you lived in the property AFTER you converted it to a rental. I seriously doubt (though it is possible) that you lived in the house (or space, if renting a part of your home) as your primary residence, 2nd home, or any other personal use reasons after you converted it to a rental.
Business Use Percentage. 100%. I'll put that in words so there's no doubt I didn't make a typo here. One Hundred Percent. After you converted this property or space to rental use, it was one hundred percent business use. What you used it for prior to the date of conversion doesn't count.

[DawnC]

You don't have to record them if you only had 7 rental days.   It is the Master's Rule.    And the magic number is...14. Rent out a couch, a spare room or your whole house for a total of two weeks or less during the tax year and you'll pay nothing in federal taxes on the extra income.

One of the best Internal Revenue Service (IRS) breaks available, this tax break is sometimes known as "the Masters exemption" because so many people take advantage of it every year during the big annual golf tournament in Georgia.

It doesn't matter whether you earn $100 or $10,000 during those 14 days that you rent out space—you don't have to report the earnings on your taxes. However, to qualify, you must:

• Rent part or your entire house for no more than 14 days during the year
• Live in the house yourself for more than 14 days during the year or at least 10% of the time that you rent it to others.

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If you intend to report the income/expenses on Schedule E and start depreciating the rental property (this is a must for all landlords):

You should count the days the property was available to rent as well as the days it was actually rented if you are going to file a Schedule E for 2020.   Rental days should include days the property was available for rent but not rented.   

• Rental Property Dates & Numbers That Matter (assuming you did not ever use the property for personal use after you used it as a rental property).   A day the property was available to rent = a rental day

Date of Conversion - If this was your primary residence before, then this date is the day AFTER  you moved out.
In Service Date - This is the date a renter "could" have moved in.   Usually, this date is the day you put the FOR RENT sign in the front yard, aka ''available date''.  
Number of days Rented - the day count for this starts from the first day a renter "could" have moved in. That should be your "in service" date if you were asked for that. vacant periods between renters count also PROVIDED you did not live in the house for one single day during said period of vacancy.
Days of Personal Use - This number will be ZERO Don't count unrented days as personal days.   Personal days are days you lived there after you started renting.

Business Use Percentage 100%.   What you used it for prior to the date of conversion doesn't count.   These rental dates refer to time when the property was a rental and if you purchased it in 2020 and never lived in the home, you have no personal usage of the home.  

[mpiccolo]

I have the same situation; although we purchased the property early in the year.  I have rental income for only 5 days due to a short term tenant already being in the property.  I am caught in this loop where it won't let me enter just 5 days on schedule E but doesn't like it when I remove the form and/or rental income???

[AnnetteB6]

Please add some more details about your situation so we can better understand how to help.

You said that you purchased the property early in the year, but only had 5 days of rental income due to a tenant already in place.  Did you have income from that tenant after you purchased the property?  If so, those days count as rental days in addition to the other 5 days.  

After the purchase, was the property immediately converted to a rental property for you or did you renovate before advertising and making it available to rent?  Making sure that the date it was converted to a rental may affect the messaging on the screen.  

@mpiccolo 

[mpiccolo]

Thanks for the reply.  The property was used as a vacation rental by the previous owners.  It is a primary residence for us.  We were obligated to honor any rentals that were booked at the time of purchase.  There was a tenant who had booked 5 days, which we had to honor, after we took possession of the property.  We were paid for those 5 days by the Property Management company, who issued a 1099.  This particular tenant's stay actually overlapped our ownership and the previous owner and we were each paid for the days we had ownership.  

[DaveF1006]

It depends. You do not need to report the income as rental income if the tenant stayed there for 14 days. However, since you received a 1099 from the property management company, you are obligated to report the income.  Here is my suggestion for reporting this. instead of reporting this as Schedule E income, please do the following.

1. Log into or open your account
2. Select Wages and income>other income
3. Miscellaneous Income, 1099-A, 1099>start
4. Scroll to the bottom of the page to Other Reportable Income
5. Other taxable income, answer yes
6. Then give a brief description of the income and the amount listed on the 1099.

[mpiccolo]

I have the 1099 entered there as 1099-MISC.  The very next required field is a choice of four items, the first of which is Rental income from the rental of real estate.  If i select that first radio button then it wants to complete the schedule E but then it's unhappy if I put a 5.  

[DawnC]

Choose the 4th radio button - Nonbusiness income from the rental of personal property.   Choosing that option will prevent any further dialogue boxes and report the income and your tax return.  

Since this income is not taxable, you can enter a negative amount in the Other Reportable Income section to offset the income on Form 1040.  To do the negative entry:

1. Log into or open your account
2. Select Wages and income>Less Common Income
3. Miscellaneous Income, 1099-A, 1099>start
4. Scroll to the bottom of the page to Other Reportable Income
5. Other taxable income, answer Yes
6. Then enter Master's Rule for the description and enter the amount of the 1099, but include a negative sign.

Master's Rule - click for more details.

@mpiccolo