only part of the house was rented out.
That matters. Big time.
That's a completely different ballgame. Kinda like declaring a touchdown at a baseball game when the batter hits a home run. 🙂
Start over in the rental section.
In the Property Profile section on the second or third screen titled "Do any of these situations apply to this property?" there are three selections that you must make:
- 2021 was the first year I rented this property.
- I rent out part of my home
- I converted this property from personal use to a rental in 2021
On the screen "Was this property rented for all of 2021?" select NO.
For days rented, the day count starts on the first day of the rental contract.
For personal use days, only count the days "AFTER" it was placed in service.
The sum of personal use and rented days can not exceed 365. That total also has be the same as or lower than the day count starting from the in service date, through Dec 31, 2021.
The rest of the property profile section is pretty self-explanatory. Just make sure you read the small print on each screen, in case it applies.
Now if you haven't already, enter your rental income/expenses (remember what the small print says!) and move on to the Assets/Depreciation section.
- On screen "Describe this asset" select Rental Real Estate Property and continue.
- On screen "Tell us a little more about your rental asset" select Residential Rental Real Estate and continue.
Enter the property description, full cost basis (no prorating by you, the program does that for you) and that portion of the cost basis allocated to the land. For the date acquired, that will be the date you originally purchased the property; doesn't matter if it was years ago either. Then continue.
- Select "purchased new" and select "no, I have not used this item 100% of the time for business". Below that select "I used this item for personal purposes before I started using it in this business".
On the same screen enter the date the property was available for rent.
Now the tricky part. at the bottom it asks for Percentage of "TIME". For your specific and explicit scenario, that question is wrong. It should read Percentage of "FLOOR SPACE" that is exclusive to the renter. So enter the percentage of floor space that is exclusive to the renter. The program already "knows" the percentage of time, based on the date you placed it in service.
That "should" do it, unless there are other extenuating circumstances we're not aware of here.
You can double-check the numbers by using the worksheet in IRS Publication 946 at https://www.irs.gov/pub/irs-pdf/p946.pdf
Use the MACRS worksheet that starts on page 37. The table that applies is table A-6 on page 72.
There may be a few bucks difference between what you figure manually and what the program figures. Thats fine.
