How do I clarify depreciation amount when I rented out a room in my home for nine months and turbotax does not allow me clarify that it was only 25% of the house?

[mike_kooi]

Am I supposed to depreciate the entire home even though I only rented a room? If I plug in the numbers as Turbotax instructs then that is what happens.

[Carl]

You don't declare any amount. The program does that for you based on the data you enter. Some of the things that matter are the square footage of space that is "exclusive" to the renter, and number of months that space was "in service" as such. You should be working this through the Rental Income & Expenses (SCH E) section of the program. On one of the screens near the beginning of that section, make sure you selected the option for "I rent out part of my home" and work it through from there. The program figures your allowed depreciation based on that, and other things too, such as your MAGI and the such.

Understand also that the rental space you are declaring (25% seems a bit high to me) is that space that is "exclusive" to the renter. None of the common area counts. For example, if you live in a 2BR/2BA house, where you occupy the master bedroom and the master bath is only accessible from that bedroom, then obviously that's not rental space.

But if the 2nd bath is across the hallway from the room that you are renting out, that 2nd bath is not "exclusive" to the renter. It's accessible by your guests visiting you for example. So the floor space of that 2nd bath can not be included in your percentage of rental space.

[mike_kooi]

Thanks for the quick response. I can't see anywhere that it allows me to plug in the percentage. You may be right that I need to lower the percentage. How and where do I do that? That is my issue.  There is a page that asks me for the value of the property and the land and also a page that asks me how many days it was used as a rental during the year, but I can't find anywhere that it allows me to plug in the percentage of space.

[Carl]

Sounds to me like you're jumping around in the program. SInce the rental stuff is the first thing you deal with in the online Self-Employed version, I suggest you click My Account at the top left, and select the clear and start over option,and begin from scratch. It's important to work through the program the way it's designed and intended to be used. Otherwise, you miss things, and can also make selections that unbeknownst to you, locks out of of areas you need to enter information in. So just clear and start over, and all you're re-entering basically, is your personal info. Of course, if you select the option to import from last year, a lot of that will be done for you.

[mike_kooi]

Is that the only way? I'm basically done with the whole thing except for this.  I have to start the entire thing from scratch just to get the depreciation right?

[mike_kooi]

I am using the Home and business version, fwiw

[mike_kooi]

Also my wife bought a CD this year so I'm using the download of that this year instead of the online version.  I don't see a "My Account" at the top left anywhere.

[Carl]

My screen shows you're using the online version of Self-Employed. It's the same as the desktop version of HOme & Business, with the only difference between the two being the spelling. (Literally!).
I actually like the desktop version better, because it's much easier to navigate, and easier to start over. To start over, close all programs and then delete the .tax2016 file in the documents\turbotax directory. Then fire up the program again, and it's as if you just installed it for the first time.

[mike_kooi]

ok, a little depressed that I have to start it all over. I hope that works. Thanks!

[Carl]

Just use the program the way it's designed and intended to be used, and you won't miss anything. Pay attention to detail too. Some screens say pick the one that applies, while other screens say to pick *all* that apply. So watch that. The small print matters for us rental property owners, and not reading and heeding it can really mess you up.

[mike_kooi]

I'm sure its possible I missed something, but I just went back and started over and there is still nowhere to enter the percentage of space used for rental purposes. It continues to depreciate the entire home as far as I can tell. At what point does that come up for you?

[mike_kooi]

I've gone back over and over and don't see anything I missed. Can I simply reduce the depreciation amount the program provides by the percentage of the home being rented?

[mike_kooi]

Actually, the program won't allow me to reduce it.

[Carl]

Please wait. I'm typing up quite a lot.

[Carl]

Don't go changing things arbitrarily, or you'll really mess up things in the program and won't be able to e-file. You just made some wrong selections on specific screens it all, and I can understand how that can be done. Start over in the Rental & Royalty section from the beginning, and if you see your property listed there, click the DELETE button, then YES to confirm the delete. Then click the DONE button to completely exit.and leave the rental & Royalty Income (SCH E) section. Then start working back through it again, entering everything anew from scratch. It's important to get this right in this section, because if it's not right, then the "Your Home" section will be a mess when you get to that point later in the program. So start working through the Rentals & Royalty Income section again, using the below as guidance when you get to the screens I cover below.
- Screen titled "What type of rental is this?" select Single Family
- Screen titled "Do any of these situations apply to this property?" select both "I rent out a part of my home" *AND* select "I converted this property from personal use to a rental in 2016"
- On screen "Was this property rented all of 2016?" Select NO.
            Then enter the number of days it was rented, with you day count starting from the first day the first renter moved it, and don't stop counting days until you get to Dec 31, 2016. I am assuming you started renting in Apr 2016, and it continued through the rest of the year. Periods of time between renters DO count for days rented, *Provided* you did not use that space for personal use for one single day between renters.
           For "number of days of personal use" enter a big, bit, round, circular ZERO. Read the screen.....all of it. It's asking for the number of days you lived in the property or used the rented space *FOR* *PERSONAL* *USE* *AFTER* you converted it to a rental. WHile possible, I doubt you did.  What you used the space for, prior to converting it to a rental does not count for jack squat.
Now when you get to the screen that wants percentage, you must get this right, and be able to prove it, should you ever get audited in the future. (If you put 25%, then if I were an IRS agent reviewing your taxes, I'd flag you for audit in a heartbeat.)
If you can, give me your state and city/county and I'll show you how to get a percentage you can "prove" and that will stand up to scrutiny should you ever have the unfortunate experience of an audit.