Pro Rate Mortgage Interest and Property Taxes

Forum|Forum|1 year ago
August 13, 2025
7 replies
103 views

My tax return e-file has been rejected twice by the IRS. Both have to do with adjusments to Mortgage Interest and Property Tax duduction.
Here is the situation:
I rent a room in my house to a company. They pay me rent and they issue me a 1099-MISC. I claim that on Schedule E and a portion (pro-rated) of property taxes and mortgage interest as an expense against that rent. I then show these two deductions as an adjustment on Schedule A (I still get a better deduction versus the standard deduction) by showing them as negative amounts in the columns for mortgage interest and property taxes. The IRS doesn't like that and I am surprised Turbo Tax lets it happen without flagging it as an error. So apparently TT doesn't know about the IRS rules in this case or I guess I can just ignore the adjustment and double dip on the expense. The only alternative would be to make the adjustments and take the correct deduction on Schedule A and file via mail instead of e-filing. If anyone knows a work around let me know.

VolvoGirl

Level 15

I’m not sure how it works but don’t you enter the full amount on Schedule E and the percentage used and Turbo Tax calculates the amount for rental expenses and puts the rest on Schedule A? Don’t think you need to do anything on A.

djpmarconiAuthor

Level 2

I know it works that way for office in the home but it doen't ask that on schedule E as it is looking at the rental as a property so any expense like utilities, maintenance, etc. has to be manually pro-rated. Unless I am missing something.

VolvoGirl

Level 15

Then aren’t you just entering the pro rated amounts on E and manually enter the other parts on A. Why are you entering them as negative amounts on A? You don’t need to enter the actual 1098.