Yes. The excess mortgage interest may be reported on the rental properties, as long as the amount represents no more than the percentage of the residence that is rented.
Example 2: Kimi owns a duplex with a balance of $1,200,000 and rents out 50% of it. Kimi would not have any interest limit and would need to manually input a 1098 with half of the values stated. The other half of the interest would be deducted in the rental expense topic.
If you have calculated a different amount using the instructions from IRS Pub 936 Part II, Limits on Home Mortgage Interest Deduction, you may enter this during the interview for Form 1098.
Click Done at the bottom of the 1098 Summary list and answer all questions until you come to the page "Your Mortgage Interest is limited." TurboTax provides a box on this page where can enter the deductible interest based on your calculations. No other overrides are necessary. Be sure to save your calculations with your other tax paperwork.
For your rental properties: After you enter the mortgage interest expense, you may see a screen indicating that the remaining portion of the mortgage interest, i.e., the mortgage interest that applies to your personal residence, will be transferred to Schedule A. However, double check that entry to confirm the amount is what you calculated. If it does not, you will need to manually adjust the amount.
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