I have an owner occupied rental property which was rented out for 167 days , 50% of the property. Where do I enter mortgage interest and mortgage insurance?

Forum|Forum|5 years ago
April 8, 2021
2 replies
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I tried entering this first in the rental section but only half my mortgage interest is getting deducted and if I add it in deductions as well as rentals it does a 1.5 deduction both are wrong

TurboTax Premier Online

ReneeM7122

To report the mortgage interest and insurance on a 50% owner-occupied rental, enter the data on both Schedule E and Schedule A.

Schedule E: Enter 50% of the total of the property taxes and interest paid in 2020.

Schedule A: Enter the non-rental portion (50% of the total) paid in 2020.

Here's a TurboTax article about real estate tax and rental property.

Carl11_2

Employee

The "days rented" count starts from the first day a renter "could" have moved in.

The "days personal use" is asking the number of days you used the portion classified as a rental for personal use *AFTER* the date you converted it to a rental. What you used it for prior to converting it to a rental does not count for anything. Typically this will be ZERO days of personal use.

If you converted a percentage from personal use to rental use in the tax year, then you are also asked a question that is in fact *the wrong question* for your specific and explicit situation. The question reads:

"Percentage of time I used this item in this business in 2020 (e.g.;80%)"

That question (only for your specific situation if the conversion was done in 2020) should read "percentage of floor space I used in this business in 2020". So on that screen (the one right before the summary screen) enter the percentage of floor space that was classified as a rental for any period of time in 2020.

The program already knows how many days it was a rental, based on the date you entered for the in service date. But it doesn't know how many days of the rental period you may have used that space for personal use, and it doesn't know what percentage of the floor space was exclusive to the rental portion. (Even though the program did ask for that on an earlier screen, it doesn't use that number in the key math computation where it needs to use it.)

Note also that if done correctly, the program will only split mortgage interest and property taxes betweeen the SCH A and SCH E. It's up to you to prorate the property insurance and all other expenses. The program will only prorate those "other expenses" further, only if you have personal use days of the floor space, after the date you converted that space to rental.

Anonymous

Carl's response solved my problem.

For me in the 2021 tax year version: I put "Days rented at a fair rental price" and put 0 for "Personal use during the year". It then asked me a question about "Rental Use %", which you list, 50%, 33%, whatever you have determined. Check the recommended option of having TurboTax allocate for me. Then I put all (Total 100% for owner + rental portion) of the mortgage interests, property taxes, expenses, maintenance, in this "Wages & Income" section for this rental property. It is then allocated subsequently in the "Deductions & Credits" section.

*Important* I deleted the property tax and mortgage interests ($0) in the "Deductions & Credits" since it is automatically allocated previously from the rental property. You can verify by looking at the rental versus personal allocations in Schedule E by looking at the table when you switch to “Form” mode.

Carl11_2

Employee

*Important* I deleted the property tax and mortgage interests ($0) in the "Deductions & Credits" since it is automatically allocated previously from the rental property.

A majority of people miss that little "note" on that screen, telling them it's already allocated the schedule A portion. I actually wish that in addition to that note, that screen would have a box for "already allocated" or something, and show the allocated amount. I think that would "get your attention" when seeing a figure you didn't enter, and would more likely cause you to read the note and understand where it came from. 🙂