Isn't this covered under Section 195 for startup expenditures? That's what I've used in the past when filling out the 4562 for similar costs.

Based on the discussion here, it sounds like Section 163 is the right approach for your loan acquisition costs. I went through something similar last year with our partnership's commercial property financing. One thing to double-check though - make sure you're distinguishing between different types of loan costs. Some costs like appraisal fees or environmental assessments might need to be capitalized into the property basis rather than amortized separately. The true financing costs (origination fees, points, etc.) are what go on the 4562 under Section 163. Also, just as a heads up, if any of those loan costs were paid by the seller on your behalf, those typically get added to your property basis instead of being amortized as financing costs. The IRS can be pretty specific about how these different costs are treated, so it's worth reviewing exactly what's included in your total. Good luck with the filing! The 4562 can be tricky but once you get the right code section it's much more straightforward.

Slightly off topic but related - I have 2 rental properties and use a property management company. Do the hours the property management company spends count toward the 250 hour requirement for the safe harbor? Or only hours I personally spend?

I'm dealing with a similar situation with my rental property and wanted to share what I learned after researching this extensively. The key issue is that regular rental income from a single-family home typically does NOT qualify as QBI unless specific conditions are met. Based on my research and conversations with multiple tax professionals, here are the main ways rental income can qualify for QBI: 1. **Real Estate Professional Status** - You need to spend 750+ hours annually in real estate activities and more than half your working time in real estate trades/businesses. 2. **Safe Harbor Rule (Rev. Proc. 2019-38)** - You must spend 250+ hours annually on rental services, maintain separate books for each property, and keep detailed contemporaneous records. 3. **Self-Rental Exception** - When you rent to a business you materially participate in. 4. **Triple Net Lease Exception** - For certain commercial lease arrangements. Since you mentioned spending less than 50 hours annually on your property, none of these exceptions would apply to your situation. Your accountant may be applying outdated guidance or misunderstanding the current rules. I'd strongly recommend getting the specific tax code section your accountant is relying on. The QBI deduction is heavily scrutinized by the IRS, so you want to make sure any position taken has solid legal backing.

whatever you do, DO NOT just ignore this!!! i did that one year thinking "oh ill deal with it later" and the penalties just kept adding up. ended up owing almost double by the time i finally dealt with it. the irs doesn't play around with this stuff.

Just wanted to add that if you're having trouble accessing your online account on IRS.gov (sometimes the identity verification process can be tricky), you can also call the automated phone line at 1-800-829-1040. It's available 24/7 and you can get your current balance by entering your SSN and some basic info - no waiting on hold for a human agent. Also, since you mentioned this is your first time owing taxes, make sure to consider making estimated quarterly payments for next year if your withholding situation hasn't changed. This will help you avoid being in the same spot again. The IRS has worksheets and calculators on their website to help figure out how much to pay each quarter. Good luck getting it sorted out! The important thing is you're taking action now rather than letting it sit.

I'm confused about one thing - if the apartment is outside the US, don't you have to report it on FBAR and Form 8938 regardless of whether it's rental or personal? My accountant told me all foreign properties need to be disclosed even if they don't generate income.

This is a really complex situation that highlights how confusing tax software can be with edge cases. You're absolutely right that TurboTax should have caught this - when you entered "0" for both fair rental days and personal use days, that's mathematically impossible since the property exists somewhere for 365 days. Based on what others have explained here, it sounds like you need to go back and correct your filing. You should enter 365 days for personal use (since below-market rentals to friends/family are considered personal use), which would take you out of the Schedule E rental property track entirely. The good news is that if your maintenance fees are less than your property taxes, you likely don't need to report any income at all. But you should definitely get professional help or use one of the tools mentioned here to make sure you're handling the foreign aspects correctly - there are additional considerations for foreign properties that go beyond just the rental vs. personal determination. Don't feel bad about the confusion - this is one of those areas where the tax code is genuinely unclear and even tax professionals sometimes get it wrong!

I'm going through this exact same situation right now - just did my ID verification last week and got the same 9-week timeline. Reading through everyone's experiences here is both reassuring and nerve-wracking! It sounds like there's a pretty wide range of actual wait times. I'm going to try setting up that IRS account to check my transcript like others mentioned, and maybe look into that taxr.ai thing since trying to decode all those IRS codes myself sounds like a nightmare. Thanks to everyone sharing their experiences - it really helps to know I'm not alone in this frustrating process!

I just went through ID verification myself about 2 months ago and can share my experience. They told me the same 9-week timeline, but I actually got my refund in 7 weeks. What really helped was checking my transcript weekly (not daily - that just drove me crazy) and watching for specific codes. The key ones to look for are: 971 code (which shows they received your ID verification), then eventually the 846 code (refund issued). My transcript didn't move for like 4 weeks straight after verification, then suddenly everything updated at once. The waiting is absolutely brutal when you're counting on that money, but from what I've seen most people do get it within that 9-week window or sooner. One tip: if you haven't already, make sure your direct deposit info is correct - that'll save you an extra week or two versus waiting for a paper check. Hang in there!