house expenses

[Marcia]

I have a client who files a Sch C and Form 8829. She has had losses for the last 4 years. There are loss carry overs that she cannot deduct. She is able to itemize. Am I able to enter real estate taxes and interest expense on her Sch A and not on Form 8829?

[TaxGuyBill]

The carryover's would not go on Schedule A.

If she is Itemizing, the current year mortgage interest and real estate taxes go on lines 10 and 11 of Form 8829, and the deduction will still be allowed even if there is a business loss.


However, with 4 years of losses, you may first want to confirm if her activity actually is a business, rather than a hobby.

[Lion]

And, run the numbers to see if using the simplified OIH that lets her itemize all her RE taxes and mortgage interest on Sch A would be more beneficial.

[ATSMAN]

I have found that in general with a substantial Sch C loss the OIH deduction is going to be limited at best. So as Lion suggested run the simplified $5/sq ft (max 300 sqft) OIH calculation and itemize the mortgage interest and Re taxes if that exceeds the standard deduction. I have found that it does work for many of my single taxpayers.