I’m trying to determine whether I can deduct the mortgage interest listed in Line 16 of IRS Publication 936 as a rental expense for rooms I rent out in my primary and secondary residences.
My Situation (Example Numbers):
I own two properties with mortgages:
Condo (previous primary residence, now 50% used as my home office for 1099 work and 50% rented).
Single-family home (new primary residence, 50% personal use, 50% rented rooms).
My combined mortgage balance in 2024 was $1,300,000 ($550K condo + $750K single-family home), which exceeds the $750K mortgage interest deduction limit.
Following IRS Publication 936 calculations, my mortgage interest deduction limit is 57.69% (Line 14).
My total mortgage interest paid in 2024 was $54,000 ($18K condo + $36K single-family home).
My deductible mortgage interest (from IRS Pub. 936, Line 10 multiplied by 57.69%) is $31,152, which I plan to split between Schedule E (rental portion) and Schedule A (personal portion).
My Question:
The remaining mortgage interest shown in IRS Pub. 936, Line 16 is $22,848 ($54,000 - $31,152). The publication states this is personal interest unless used for business, investment, or other deductible activities, citing "deductible interest incurred to produce rents or royalties" as an example (Pub. 936, Table 2).
Since I am renting rooms in both properties, can I deduct some or all of this remaining $22,848 as a rental expense on Schedule E? If so, how should I enter this in TurboTax?
Note: The numbers provided are for example purposes only and do not reflect my actual mortgage balances or interest payments.
Any guidance would be greatly appreciated!
