I am afraid I am still confused.
A. As an example, supposing we had a home for rent for rental for 8 months (4 months rented, 3 months vacant, and 1 month aggregate/intermittent owner-occupied), and then converted it back to my home for the remaining 4 months . We paid $12,000 for mortgage interest and $12,000 for local tax.
A. The sources of the confusion, for me, would be:
1) the distinction, when the home is up for rental part of the year, between personal use during the time the home is up for rental (1 month), and use by the owner when the home is no longer rented (4 months). Turbotax direction is that personal use applies only to the rental period (1 month), not following conversion: "the number of days during the year you lived in this rental property after converting it from a rental do not count as personal use days and should not be entered as personal use during the year ..." (i.e. not 4 months).
2) whether to divide the reported mortgage interest and local tax between the rental period in the rental income section (schedule E) vs. itemized deduction (schedule A). Turbotax direction is to "enter the interest as it appears on line 1, Form 1098... Check the qualified interest is primary home/ vacation home ... and Turbotax will allocate personal portion of qualified interest over to the deduction section." In Schedule E, should it be $12,000 - as reported in the form 1098? If Turbotax did not ask how long the home was up for rental, how does it know to allocate between rental and non-rental? Or should I fill out $8,000 (corresponding to the 8 months of the rental). Similarly, how does one report local/ county taxes between rental and home periods in the Federal and State report; i.e. $12,000 and Turbotax will allocate it correctly, or $8000 for schedule E and $4000 for schedule A?
