The rental portion of the following expenses is fully deductible on Schedule E for vacation homes:

• Home mortgage interest entered on Income > Rent and Royalty worksheet > Section 5 - Rental of Vacation Home > line 7 - Qualified vacation home mortgage interest.
• Real estate taxes entered on Income > Rent and Royalty worksheet > Section 5 - Rental of Vacation Home > line 8 - Vacation home Real estate taxes.
• Direct rental expenses. These include advertising, commissions, management fees, other interest, supplies and bad debts.

The rental portion of the following expenses is deductible only up to the amount of rental income remaining after subtracting the fully deductible expenses listed above:

• Indirect rental expenses. These include all the other rental expenses entered on Income > Rent and Royalty worksheet > Section 2 - Expenses such as auto and travel, cleaning and maintenance, insurance, legal and professional fees, repairs, utilities, amortization of bond premiums, points and any expense entered as "Other Expense" in line 24 (with the "direct expense" checkbox blank).
• Excess mortgage interest entered on Income > Rent and Royalty worksheet > Section 5 - Rental of Vacation Home > Excess vacation mortgage interest.
• Depreciation.

Any expense not deducted this year is carried over to next year. The carryover is split between depreciation and operating expenses.
The statement that is prepared to support the rental deductions can be found in Publication 527, page 20, and is labeled "Worksheet 5-1. Worksheet for Figuring the Limit on Rental Deductions for a Dwelling Unit Used as a Home."