OK. According to an answer for a similar question 2 years ago, the one property must be entered as two separate entities and a schedule E prepared for rents and another schedule E prepared for royalties. For the same property! Unless to comply with some IRS rule, why is the software programmed this way? A review of the questions indicates this creates much confusion and annoyance. I you can't modify the software, at least clarify the situation on the "Learn More" pop-up for the Rental Properties and Properties income section.
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The IRS requires that rental income and royalties be reported separately even if they are from the same property.
Both items are reported using Schedule E however they are reported in different sections on Schedule E
Yes, this is confusing but that is how the IRS requires these items to be filed.
In this instance, would the property tax be split and applied based on land dedicated to each item? If rental made of materially all of the plot, could the property tax be 100% applied to the rental activity (0% applied to the royalty activity)?
You don't pay or even get assessed property taxes on royalty income.
All property taxes and mortgage interest (if any) along with any costs associated with the land are claimed against the rental income, not the royalty income.
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