Investors & landlords
You are on the right track, the best option is to manually prorate the amount for the Mortgage and Property Tax and enter the amounts directly to the Schedule E Rental Income and Schedule A for the Itemized Deduction.
Since Form 1098 will not reflect correctly on Schedule A, when completing the Mortgage interest section in Sch A, bypass the question regarding Form 1098 and enter the amount of prorated interest in the section that
shows "Let's get the detail from your Form 1098. You will click on the Box "The interest amount I entered is different than what's on my Form 1098. See screenshot below.
Enter the SCH E expenses as direct expenses as follows:
- login to your TurboTax Account
- Click on "Search" on the top right and type “rentals”
- Click on “Jump to rentals”
- Continue until the “Tell us about your situation this year” screen and select “Converted home to rental or rental to home”
- Continue through the questions
- When you are working on your assets (house) on the “Tell Us More About This Rental Asset” screen select “The item was sold, retired, stolen,… converted to personal use,….” and you can enter the day you converted the property to a rental
It is important that you keep a record of your calculation and Form 1098 in case you have to produce these documents to the IRS.
See the link below which might also be helpful.
