Investors & landlords

1)  Mortgage Interest and Real Estate Taxes basically skip Form 2106, and go directly on Schedule A.  So you can just enter the $2500 as a rental expense, and $7500 as an Itemized deduction on Schedule A.

2)  I have no idea why it asks you that, but it doesn't really matter.  Checking that box may just ask you some additional questions.  Just make sure that the $7500 shows up on Schedule A, and you are fine.

3)  I think the taxes should be prorated.  Use 3/12ths for a rental expense, and the rest as an Itemized deduction on Schedule A (see Question 1).