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Returning Member
posted Jan 30, 2021 2:43:15 PM

Calculating personal use on multifamiily property

I am confused about the intended way to allocate expenses and depreciation on a multifamily property. I have a 3-unit building. One unit is rented year round, a second is always reserved for personal use and a third is sometime rented and sometimes used for personal use.

 

It's easy for me to determine a percentage of personal use. The trouble is with the question "Was this property rented for all of [year]?" The honest answer is "Yes" (because part of the property was rented out all year, just not all of it) but if I provide this answer my schedule E ends up showing 365 days rental use and depreciation is allocated 100% to rental. However if I answer "No" I'm asked to provide a number of days out of 365 that is was rented and this doesn't really work either.

 

Would the proper course be to provide the total average number of days out of the year of the three units? For instance if unit 1 was rented 50% of the year, unit 2 0% and unit 3 %100 then we'd assume personal use to be 182 days?

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3 Replies
Level 1
Jan 30, 2021 4:02:46 PM

No, you cannot use the total average number. You need to enter each unit separately. On Schedule E, you'll list your total income, expenses and depreciation for each rental property and use actual number of days the property was rented out or used for personal use. 

 

You can find information how to enter your rental income in TurboTax here:

 

Where do I enter income and expenses from a rental property?

Returning Member
Jan 30, 2021 4:25:11 PM

Thanks for the response!

 

I can see the value in that approach; however the bulk of the depreciation is not related to a single unit but rather the entire propoerty (i.e. the cost basis of the property). 

 

As I've looked at this some more it appears that I can allocate that within the asset book. You can adjust the business percentage of each individual asset there.

 

So it seems that a hybrid approach might work best: assets common to the entire property are tracked separately from assets that are specific to a particular rental unit.

 

Thoughts?

Expert Alumni
Jan 31, 2021 9:48:36 AM

Yes, if I follow your logic.

 

APT 1-Rental : 1/3 of the value can be depreciated and 1/3 of common expenses are allowed.

 

APT 2-Personal : Only 1/3 of mortgage and property taxes allowed on Schedule A.

 

APT 3-Mixed Use : Count days and prorate expenses.