If there are only two units involved, then you can prorate the total mortgage interest between the two units based on the square feet of each unit. If they are essentially the same size, then divide it 50/50.
Enter your personal portion for the unit that is your residence in the mortgage interest section for itemized deductions. Then, when you are going through the Rental Income and Expenses section, enter the portion of mortgage interest that applies for the rental unit as a rental expense.
@miok966
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