I own a single family home that has been split into two units. When I first bought it, I rented out both units. After a few months, I converted one of the units into my primary residence. I am classifying the property as multi-unit and doing a Schedule E for each unit.
For the unit that was a rental the entire year, am I supposed to classify it as owner-occupied or not (since it wasn't at first)?
Can someone please help me understand how to handle depreciation, mortgage interest, and other deductions? I get that I need to allocate expenses, but I'm really confused about what TurboTax will auto allocate vs what I need to allocate manually.
TurboTax will do the allocation for you on the unit converted to personal use provided you enter the date it was converted.
If there is a distinct and separate unit that has always been use for rental purposes, it should be classified as such.
If you did not enter the duplex as two separate depreciable assets when you started depreciating it then this will be a bit more difficult to complete. And on top of it you have to convert one unit to personal use which is something that the program will not do easily. I highly recommend you seek professional assistance for this return OR use the downloaded program so you can make the direct form entries you will need in the FORMS mode.