Rental Percentage - This is the percentage of physical space. What percentage of the entire property is exclusive to the renter. Example: 20%
Business Use Percentage - This is percentage of time. Of the percentage of the property that is exclusive to the renter (20% in this example), what percentage of time is it used for business purposes? In the case of a rental, you utilize it 100% of the time for business.
Be aware that there is a flaw in the program in calculating the correct depreciation. Actually, it's a flaw in the question, not the math. To confirm if you experience this flaw or not, use the worksheet from IRS Publication 946 to manually figure the depreciation amount for that first year, and confirm it matches what the program figures. IRS Publication 946 is at https://www.irs.gov/pub/irs-pdf/p946.pdf Use the MACRS worksheet that starts on page 37, and the depreciation table you'll use is table A-6 on page 72.
If your manual figure does not match the TurboTax figure, let me know and I'll show you how to make the program do it right so you don't have to do a manual over-ride. (If you do a manual over-ride for this, you will not be able to e-file the return, and will invalidate the 100% Accuracy Guarantee.)
