Hi Lina
When entering a room rental, we can say the room is say, 25 % of the square footage and then when entering the property tax and mortgage interest, it notes to enter the full amount) and does the split correctly: in the schedule E worksheet, i see the columns "reported on schedule E" and "allocated to personal use" for real estate taxes and mortgage interest.
However for the points, when entering those intangible assets, it specifies:
"Since you're only renting out a portion of this property, you shouldn't enter the full amount of this asset. Instead, you need to multiply the full amount of this asset by your rental percental to find out the cost you should enter for this asset." and in the schedule E worksheet 19h, I see the full amount (divided by duration of amortization and pro rated from the date of refinance to dec 31), not the 25% of it only.
Also although my loan was over 30 years, it seems rental property depreciation is 27.5 years.
It seems we would need to do the split manually and have amortization of the portion of the square footage dedicated to rental in schedule E, then in deductions, enter a mortgage for $0 (so it's not counted twice) check the box for points and enter the fraction of the square footage not rented (here 75%) times the actual points paid.
It would show in schedule A worksheet 10 "total points originally paid on a loan for which the points must amortized"
In case of rental, it seems we should also be able to count as expense the closing costs and fees.
Is it the correct way to handle this?
Thank you
