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Level 3
August 11, 2026
Solved

Vacation home and prior passive losses

  • August 11, 2026
  • 2 replies
  • 33 views

In the past, TP rented out home and created passive loss carryovers.  This year, they moved into the home BUT rented out a room 100% of the year (so falling under the vacation home rules).  I’ve got most everything working properly EXCEPT that Lacerte is allowing the prior passive losses to offset the current income renting the room generated.  I am getting a diagnostic telling me that the passive activity rules do not apply this year, instead it’s the vacation home rules -- great, we agree.  What I cannot figure out is how to not show the income on the 8582 BUT still show the prior year losses, which I believe is appropriate.  I’ve tried reporting as a nonpassive activity (which seems the most appropriate since that indeed is the case here, but that doesn’t seem to have any effect, even though that’s what it’s supposed to do).  I’ve got number days rented and number personal use days both at 365 -- since they are renting a room this is correct.  Anyone have any thoughts?  I’d appreciate it!

Best answer by PhoebeRoberts

Set up the vacation home activity as a separate Schedule E. Edit the depreciable assets so they’re linked to the new activity.

2 replies

PhoebeRoberts
Intuit Community Champion
August 11, 2026

Set up the vacation home activity as a separate Schedule E. Edit the depreciable assets so they’re linked to the new activity.

Level 3
August 11, 2026

Thanks!  That appears to be what’s needed as a workaround.  I renamed the activity with the prior PALs as Prior PAL Carryover so I wouldn’t forget it in the future (making a note in the file that it relates to the room rental -- vacation home in case they turn back into a full time rental or sell)