Initial details:
Primary residence - rented out the basement mother-in-law on airbnb 38 days (10.4%) last year. The unit is 25% of the home. When it is not rented on airbnb we do not use it. I have seen on other support posts that in prior years TT asked if you wanted them to do the math for you - I'm not getting that option.
I am entering:
What type of rental is this? A: Vacation or short-term
I rent out part of my home
No this property was not rented all year
Days rented at a fair rental price: 38
Personal Use during the year: 326 (should this be 0 if we never use it or stays 326 since when it's not rented it is accessible to us as part of our home?)
Now onto the expenses: I entered the full mortgage interest in the rental section (assuming TT would divide it up with Schedule A) but it appears to double the deduction and not divide it between rental and primary. Other expenses (i.e. utility, etc.) I then entered the calculated value for just the time the area was rented (i.e. Y x 25% (part of home rented) x 10.4% days of year rented), but it seems after going through every page on TT that TT IS doing the calculation and lowering the expenses to just 10% of what is entered. So, I'm completely confused what values to actually enter for each scenario.
Utilities: Total utilities for ALL of home = $4343. In TurboTax do I enter $113 for Utility Expenses (4343 x 25% x 10.4%), or $1085 (4343 x 25%) and TT does calculation for the 10.4% of time it's actually rented?
Same for insurance: Home insurance = $650. Do I plug in $162.50 (25%) and TT will do the rest on calculating portion when rented? Or do I enter $16.90 ($650 x 25% x 10.4%)?
Real Estate Taxes: $5000. Am I entering $1000 in rental section or $104? Do I then need to manually go and change the real estate amount entered in Deductions and Credits to $4000 (or $4896)? It seems to be counting it twice.
Reporting Mortgage Interest ($25,000): TT is asking me to enter the mortgage interest from Form 1098 line 1. Which doesn't make sense because that would allocate the entire mortgage interest in the rental section. Again, am I entering $6,250 in the Rental section - and then manually updating Deductions and Credits to lower it from $25,000 to $18,750? That would seem to underreport the total mortgage interest if a calculation is then being done on the 10% time it is occupied. Or do I enter $650 in the Rental mortgage interest section (25,000 x 25% x 10.4%) and $24,350 in Deductions and Credit since that will then add up to $25,000?
Misc. Expenses (expenses ONLY for rental): I'm adding in cleaning fees, linens, etc. here that are 100% used by the airbnb only and adding the full cost. Correct?
Depreciation: Residential Real Estate Asset. Entering home purchase price - land cost. For Percentage of time I used this item for this business in 2018 (e.g., 80%): What am I supposed to enter? Entering 10.4% would take depreciation from the entire home and not just the 25% section. Am I supposed to enter 2.5%? There is no section here asking for what percentage of asset I'm depreciating. Or, do I change all the calculations for cost basis and land cost and enter 25% of total cost in the previous page?
But now when I go to Deductions and Credits the Mortgage Interest and Property Tax sections both have values HIGHER than the full 100% value.
Thoroughly confused and would appreciate any pointers! Thank you.
