Hi, I purchased my home in May 2015. We ended up renting back to sellers for 59 days. I entered into a post-settlement occupancy agreement with the seller and related income was included in my HUD settlement statement. I researched some of the already answered questions on turbo tax and came across two different answers. One super user suggested this "The rent income received is reported on Line 21 of the Form 1040 due to the apparent not-for-profit determination". Other super user suggestion seems to report it in Rentals & Royalties section as "I converted this property to personal use in 2013".
I really need some guidance as to which approach should I use. If I have to use the Rentals & Royalties section and check "I converted this property to personal use ", then I have some questions and will appreciate the answers:
- I am not clear if I should click the option of "active participant" because it asks for management decisions for the property. I am 100% owner and just rented that property as part of the rent back. This question significantly changes my tax refund.
- I am using 0 days for "personal use". Is that correct? I am the first time home buyer and I purchased the home for my primary residence. After rent back of 59 days, I took possession of the property for my personal use.
- After the sellers left, they damaged the property and besides my dispute I wasn't able to recover the repair cost from them. I had to incur some amount for repairs. Is the screen "Did You Pay Anyone $600 or More for Work Related to This Property?" where I should click "yes" for such repair. I didn't issue any 1099s.
- On the screen of "Enter Escrow Fees", should I include the full amount of Title Insurance and Transfer taxes I paid to purchase this property? I only rented for 59 days.
- Similar question for all of the other expenses in this section on the following screens such as property tax, mortgage interest, I will include pro-rata here. Correct?
Thanks!
