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Married last year and we each owned homes, one is now rented

Forum|Forum|4 years ago
February 19, 2022
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I am trying to figure out where to list mortgage interest in relation to what is now a second home rental property. I got married in the end of June. My wife has a townhouse that was her primary residence up until that point. It was then rented out the first part of July. Since she lived in it for more than 14 days or 10% of the year (I think those were the stipulations), do we list the mortgage interest under deductions along with the mortgage interest for my house that is now our primary residence? Or do I list that mortgage interest under rental deductions/expenses along with other rental property expenses and income? And with that, in the rental section, do I only include expenses (mortgage payments, utilities, HOA, etc) for the time that it was rented out last year from July-December? Or do we include those expenses for the whole year, which would include the months that it was my wife's primary residence?

Best answer by ColeenD3

Yes, you are correct in a few of your assumptions. Your wife's house was converted from a primary home to a rental property. The "14 day or 10%" rule does not apply since there was no personal use after the conversion.

You asked, "And with that, in the rental section, do I only include expenses (mortgage payments, utilities, HOA, etc) for the time that it was rented out last year from July-December? Or do we include those expenses for the whole year, which would include the months that it was my wife's primary residence?"

Yes, you would prorate mortgage interest, PMI if any, and property taxes between Schedule A for the personal part of the year, and Schedule E, for the rental part of the year.

Expenses related to the rental portion of the year are deductible on Schedule E, such as the HOA, utilities if you pay for them, repairs and depreciation. You can't deduct any personal portion for theses expenses.

To find Schedule E in TurboTax is to use the Search box at the top right side of the TurboTax header.

Enter "schedule e", hit Enter, then click "jump to schedule e". This will take you directly to the start of this section.