Investors & landlords

Yes, you should split the closing costs between the two properties using the information below..  

Take the total cost of both properties then divide each by the combined total of both properties to arrive at a percentage of each property.  Use this percentage times the total of closing costs to arrive at the correct amount for each property. This assumes they were not broken down by property on the settlement statements.

If you are unsure of cost of each property, use the County Tax Assessments to arrive at a value of each, then use the same formula to arrive at the percentage of each property.

Once this is completed you can use the 'cash out' amount that was used for the rental property as mortgage interest on the rental.  The remainder will be home mortgage interest.

Any additional debt not used to buy, build, or substantially improve a qualified home isn't home acquisition debt. TurboTax will calculate the amount of allowed mortgage interest deduction based on your entry or you can choose to make the entries yourself.

• To review the information and worksheets you can use this link: IRS Publication 936, page 12 (you can make the appropriate entries by selecting 'I'll enter it myself'
• See the image below for the questions that must be answered for TurboTax to calculate correctly.