A few years back, I bought a fourplex and moved into one of the units. Every year since then, turbo tax has been automatically taking 75% of my expenses and allocating them to my rental.
Last year, I moved out of that unit and rented it out. How do I enter this into turbo tax?
Question 1: Should I select the following about my fourplex - "converted home to rental or rental to home" and "rented a unit in a multi-unit where you live"?
I selected both of those. But then it asks me this:
Question 2: "Was fourplex rented every single day?" And the answer to that would depend on whether they're talking about the 3 units that I didn't live in, or the unit that I did live in (because clearly that unit wasn't rented, since I was living there). So how would I answer that question? If it's talking about all 4 units, including the one I lived in, then clearly no, it wasn't rented every single day. Only 3 units were, but 1 wasn't, however, that's not an option as an answer here.
On the next question, it had me enter how many days it was rented and wasn't. However, again, that depends on whether we're talking about the 3 units that were always rented, and my one unit that was my primary. If I enter the amount of days I rented my primary, it's going to apply that calculation to all 4 units, which is wrong! Question 3: What do I do here? Am I going about this whole thing all wrong?
Here are the numbers as an example:
Let's say rent for the whole year from the 3 units is $30000.
Let's say I moved out from my one unit on Sept 1. So it was only rented for 33% (4 months) of the year, and the total rent received was $5000. That one unit I lived in is 25% of the whole property for expense purposes (eg, dividing the taxes and the insurance between my primary and rentals).
For expenses, let's assume property taxes were $4000 for the whole property.
Technically, the calculation for the expenses should go something like this for the rental portion: 4000*0.66 (the amount of months I lived in the property) * 0.75 (because I lived in 25% of it during those months, so we only count 75% on schedule e) = $1980 up until September.
From September, it would be 4000 * 0.33 (the 4 months I didn't live there and had it rented) = 1320.
Add the two, 1980+1320 = $3300 total for the rental portion taxes.
How do I get turbo tax to make the right calculations?
Some people are suggesting I need to enter another property for my unit... but how would we do depreciation in that case? Isn't there a simple way to do all this in turbo tax instead of being confused? I mean, they didn't assume that I'd live in the fourplex forever, did they?
