Turbotax will only do "some" (actually very little) of the math "if" (and only if) you select the option to have the program do it for you. I do not recommend you let the program do it for you. I recommend you do it yourself.If you elect to have the program do it for you, they only thing it can "correctly" figure automatically is mortgage interest and property taxes. It can not and does not pro-rate the property insurance. This is because the insurance for the portion of time it was personal use is not deductible anywhere on your tax return. So I suggest you elect to "do the math" yourself. If the property will be a rental for years to come, you only need to do this the first year you placed the property in service. So select the option to do it yourself that first year.
- The program (not you) will figure the first year depreciation automatically, regardless of what you chose, based on the date you placed the property in service.
- You manually figure the interest deduction yourself based on how many days out of 365 days the property was in service. The difference is a SCH A itemized deduction.
- You manually figure the property taxes deductible on SCH E the same way you figured interest deduction on SCH E. The difference is a SCH A itemized deduction.
- YOu manually figure your property insurance deduction same way as above. However, the difference is "not" deductible on SCH A or anywhere else on your tax return.
For all other rental expenses, you claim the full amount incurred starting from the date the property was placed in service, until the end of the year. There is no pro-rating these expenses. So if you paid $100 a month for yard care that's $1200 a year. If you placed the property in service on Jun 1st, then you can only claim your costs for the last 7 months of the year, or $700 in this example.
