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MaverickAl
Returning Member

Convert Primary home to rental in August

I converted my primary home to rental on 8/2/2021 ( 153 Days) , I read this article https://ttlc.intuit.com/community/investments-and-rental-properties/discussion/primary-and-only-home... 

1-should I put  0 days as personal use and 153 days as rental use?

2- for expenses like Mortgage interest and tax should I put the total Interest I paid in 2021 and the system prorate it or should I calculate the prorated portion by myself?

3- for the rest of the maintenance and repairs, should I report the repairs and maintenance after I put it in service or should I put all of them and system pro rate it?

 

 

 

 

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2 Replies

Convert Primary home to rental in August

1-should I put  0 days as personal use and 153 days as rental use?  Correct ... once it was considered a rental you did not use it personally.   As the screen says ... do not count personal days before the conversion.

 

2- for expenses like Mortgage interest and tax should I put the total Interest I paid in 2021 and the system prorate it or should I calculate the prorated portion by myself?   The program doesn't prorate things well ... I highly recommend you do the proration yourself and enter just the rental portion in the rental section and the personal portion in the Sch A section.

 

3- for the rest of the maintenance and repairs, should I report the repairs and maintenance after I put it in service or should I put all of them and system pro rate it?   Again I highly recommend you prorate all the expenses yourself ... if you choose to let the program do it then carefully review all the entries on the Sch E and Sch A  BEFORE you file the return. 

Carl
Level 15

Convert Primary home to rental in August

3- for the rest of the maintenance and repairs, should I report the repairs and maintenance after I put it in service or should I put all of them and system pro rate it?

Neither. Repair/maintenance expenses incurred in preparing a property for  rent *for the very first time* are flat out not deductible. See IRS Publication 527 page 4 column 1, section titled "Pre-rental Expenses". It clearly states, "You can deduct your ordinary and necessary expenses for managing, conserving, or maintaining rental property from the time you make it available for rent."

Since the property was not placed "in service' Until after all the repairs were done, they are not deductible. Now I would expect placing a property in service before repairs are completed may have a chance of raising flags. Small chance maybe, but not zero chance.

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