Your mortgage interest is a qualified deduction as an itemized deduction and as a rental expense. As a rental expense, you will only enter the percentage of the interest that represents
the percentage use as a rental The remaining portions considered as personal use, may be deductible as an itemized deduction.
TurboTax can help you properly allocate your expenses.
When you visit the Rental Property section under Wages and Income, the interview will ask you if you rented part of your home.
When you make that selection, you can either figure the percentage of
expenses related to the rental or you can allow TurboTax to do the math.
If you allow TurboTax to do the math, once you define the percentage/days
used as a rental, you will enter the full amounts of your expenses and
TurboTax will figure your rental and personal expense amounts. Any personal deductions that are a qualified itemized deduction (i.e., remainder of mortgage interest) will automatically be added to your total itemized deductions. You will find this listed under Deductions and Credits.
In addition to interest, you may also deduct the expenses directly related to
the rental. Like your mortgage interest, you may need to split the expenses based on "direct costs" or "indirect costs". If you only have full amounts, again, TurboTax can do the math for you.
