Do I report Mortgage interest for Rental Property as rental expense or an itemized deduction?

[anacortes1010]

I am confused about mortgage interest regarding my rental property. It says to not enter under personal but to put it under the expenses of the rental. Do I just skip this part all together? If so, How? Thank you for your help!

[DS30 · Accepted solution]

Yes, for your rental mortgage interest, just report this under your rental section. Any portion that is not available for your Schedule E will automatically go to Schedule A (on one of your rental properties).

It is important to note that for the mortgage interest deducted on Schedule A, you are only allowed an itemized deduction for your main house and ONE additional residence. The IRS does NOT allow a personal mortgage interest deduction (on Schedule A) for more than TWO homes.)

If you enter it in both places, your deductions will be counted twice.

[GN]

Some answers say we have to manually prorate, which would set up a flag that the 1098 doesn't match what was actually reported. When I look at the forms TT prorates for you based on days rented.  Very confusing and no consistent answers. Please help!!

[sidhpuramayur]

Yeah, this is confusing. As per Airbnb advisory document you have to prorate rental portion of mortgage interest. In TT when you enter mortgage interest in rental section, it says "TurboTax will allocate your personal portion of qualified interest over to the deduction section for you." So after adding amount from box 1 of 1098 form in both rental portion and deduction portion, I see big number in line 10 of Schedule 10, almost twice the amount of total mortgage interest I paid. I'd really appreciate if someone can help here.

[wendybatson]

same problem here.  TT is adding together the total amount of mortgage interest paid and the amount to be credited to personal deduction thus making it appear as if double dipping.  See no way to correct!  Help.

[whasenk]

Agreed - same problem here. Not sure if I should just NOT enter it under the Schedule E, and leave it all for personal deduction? Definitely would like some help here!

[joyintaos]

Same here. all i can think of to do is to manually allocate the percent that goes to my rental room on the schedule E and adjust it until the result is what it should be to add up to my actual 1098. this is clearly a glitch of some kind. Makes it look like we are deducting 1098 twice, and so many people won't notice or question it. So... is Turbotax going to cover people who don't notice?

[mydisplayname1]

Agreed. Very confusing wording here on the Schedule E. It gets worse when this TurboTax TaxPro (<a rel="nofollow" target="_blank" href="https://ttlc.intuit.com/questions/3268823-lived-in-my-home-and-rented-it-mortgage-interest">https://...>) says that you should enter the FULL mortgage amount under Schedule E mortgage interest - but TurboTax does not, in fact, remind you to "not enter" your mortgage under your personal deductions.

Happy amending...

[yuzhang49]

I'm doing the tax return for 2018, the double deduction problem is still there...

[bros31]

@yuzhang49  @anacortes1010 @mydisplayname1 @joyintaos @whasenk 

@wendybatson  @sidhpuramayur 

I wonder how you guys did it last year. I have the same question now in 2020 and it seems there was not a definite answer on this

[jimb108]

Same here for 2019 taxes.  Should I manually enter the difference in the "Let's get the details from your Mortgage 1098" screen?  and check the box that says "the interest amount is different from my 1098"?

Otherwise it's a double dip.  Same for property tax on that same screen?

[KrisD15]

If the interest and/or property tax is for ONLY a rental, ONLY enter that information as rental expenses on your Schedule E.  Do not also enter it on the 1098 Home Mortgage Interest, that screen is only for the interest and property tax on your personal residences (one primary home and one personal use only vacation home). 

If you have a rental that is also used for personal use, or you rent out part of your home, enter the information only on the Schedule E screen and TurboTax will allocate the amounts between rental expenses and Schedule A. 

[jimb108]

To be clear,  I rented a room (10% of sq ft) in my house for 95 days in 2019. So when you say "enter the information only on the Schedule E screen and TurboTax will allocate the amounts between rental expenses and Schedule A."

This mean enter 100% of interest and taxes in the "Rental Properties and Royalties" section which is for Schedule E, right? (The screen says "since we are allocating, be sure to enter 100% of your expenses in these fields").  When I do that,  90% of expenses are allocated to Schedule A and 10% are on Schedule E. 

So far so good?

So when I get  to the "Let's get the details from your Mortgage 1098" screen in the Deductions & Credits section do I enter only the balance of my mortgage interest and taxes and check the box that says " The interest amount I entered is different than what's on my 1098".  This seems the only way to get the numbers on Schedule A to add up to what I actually paid as is stated on my 1098.

Because if I enter the totals directly from my 1098 on this screen Schedule A is over inflated.

Thanks!

[KarenJ2]

Yes, you would only enter the balance.  You would need to take the total amount from your 1098 and manually subtract the amount TurboTax has allocated for the rental and enter the remaining amounts allocable to personal use.

[roger_xu]

TurboTax needs to add a feature that detects if your home is rented part, add a reminder in schedule A your home deduction section that: since you have rented part of your home and deducted allocated mortgage interest over there at schedule E, DO NOT enter mortgage interest again here