Here are the answers to your questions in order.
- The property taxes ratio for the rental period begin on the day it was converted to 100% rental property, August 4th through the end of the year for all taxes paid in 2023.
- No, the monthly loan payments are not an expense. This was the purchase of a capital improvement to the property. The real question is what is my cost basis for the home and land at the time it was converted to a rental property. This includes original purchase, purchase expenses, any capital improvements over the years. You must compare that to the current fair market value (FMV) on the day you began to rent it and use the lesser of the two. Once this is determined you will enter the home asset cost basis or FMV then the land portion. The county or city tax assessment records can help you determine the home and the land portion.
- Example: land value/total value = land percentage -- home value/total value = home percentage
Note: You must answer that the property was 100% rental because it was on the day it was converted to rental use. You will be asked what date the rental was purchased and the day it was rented. And it must be rented at fair rental value (FRV). You will need to enter only the rental percentage of expenses paid for the whole year such as home owners insurance, property taxes, interest and then only the expenses paid specifically for the rental property such as utilities, if applicable, for the rental period.
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