I rent rooms in my house. In the asset section on schedule E do I put the price of the house or the rented % price?

Forum|Forum|2 years ago
February 23, 2024
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PICS AT BOTTOM. I understand that when you rent rooms in your house, you must calculate the percentage rented based on the square feet used solely by the renter. So I rent 2 rooms and I've calculated it to be around 25%. I've then filled the schedule E deductions based on this percent. So 25% of the total of utilities, taxes, interest, etc. Also calculated to rented months so 10 month of out the 12 by diving the 25% by 12 x10. I've put the remainder of taxes, interest, etc on Schedule A.

The one thing that has me confused is that on the Asset section at the bottom when you add details about the house, there's a section to enter the price of the house, purchase date, & date it was available as a rental. Do I put the full price of the house or do I need to calculate the price of the rented portion(25%) of the house. In the first screen, it sounds like I put the full purchase price. On the second screen where I put the land value section, is that where I calculate the 25% of the purchase price of the rented section? THANK YOU SO MUCH!

TurboTax Premier Online

Carl11_2

Employee

If you told the program that you rent out 25% of your house, and that it was rented for 10 months, the program (not you) will do the math *for you*. So you enter the total of what you paid for the house, and the total of the property taxes you paid. Take note that these are the only two things the program will prorate for you. Everything else (including insurance cost) has to be manually prorated by you.
Also, be aware this as been highly problematic for several years now, for those renting a part of their primary residence. So *check* *the* *numbers* when you're done. See IRS Publication 946 at https://www.irs.gov/pub/irs-pdf/p946.pdf and use the MACRS worksheet on page 36 of that publication. For line 6 of the worksheet use table A-6 on page 71. I can't stress this enough *CHECK* *THE* *NUMBERS*!!!! I fully expect them to be wrong in the program, unless the programmers have actually fixed this issue - which I doubt.

chris_askAuthor

Hi Carl,

Thank you for responding! I was never prompted to note the % of the house i rented. I chose to calculate values myself on the option to let turbotax calculate.

I've read on similar responses that the program won't calculate correct values so we need to do it ourselves. Is that not true? Any thoughts on the house and land value section? Do I need to redo and allow turbotax to calculate values for me?

DianeW777

No, you do not need to redo your rental activity. If you have done all the proration of expenses yourself and you use the square feet of space rented divided by the total square feet you should be good to go. Sometimes, depending on what you enter it can be confusing and this way you know exactly what you have expensed. Keep your records together.

You can also enter the business percentage of the cost of your home for depreciation. If you calculate the business use percentage do not put in any percentage values for business use because your figures would represent 100% of the rented space. it is not necessary for you to enter the land value but you must remove that from the cost basis to arrive at the business use percentage of the building. You could use the tax assessment records to arrive at the portion of the purchase price attributable to land.

@chris_ask

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