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Investors & landlords
Yes, you can determine which method you used to allocate interest and taxes on a prior return by calculating the percentage that applies to your Rental Expense.
The Tax Court method uses the ratio of days rented divided by the number of days in the year.
The IRS method uses the ration of days rented divided by the total days used (rental days + personal days).
In the workpapers for your prior year return, look for Schedule E Worksheet for your Rental Property. Rental days and Days of personal use appear in the top section. Mortgage Interest appears on Line 12. Column (c) shows the allocation to your rental property; column (e) shows the allocation to personal use.
Use the values from this worksheet to calculate the allocation using both methods to see which one you used last year.
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