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vwbalfour
New Member

Duplex where there was cost exclusively allocated to rental unit

I have a duplex where I did upgrades on the rental unit. Where can I enter the info in Turbotax. Turbotax is splitting the cost because I live in one of the units
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Accepted Solutions
Coleen3
Intuit Alumni

Duplex where there was cost exclusively allocated to rental unit

Since some of your expenses are 100% for the rental and others are prorated, you must choose "No, I'll do the math and enter only the rental related portion." In that way you can enter 100% of the upgrades but you will have to manually prorate the Mortgage Interest, Property Taxes, Insurance, etc. since they cover the entire building.

If every expense were, say, 50% rental and 50% personal, you could allow TurboTax to do the math.

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4 Replies
Coleen3
Intuit Alumni

Duplex where there was cost exclusively allocated to rental unit

Are the upgrades for the entire building, rental and personal combined? Are you trying to claim upgrades for the personal portion too? Normally since one half is personal property (no deduction allowed but mortgage interest, property taxes and PMI) and half is business, you can only deduct the business portion expenses.
vwbalfour
New Member

Duplex where there was cost exclusively allocated to rental unit

No the upgrades are only on the rental unit...
Coleen3
Intuit Alumni

Duplex where there was cost exclusively allocated to rental unit

Since some of your expenses are 100% for the rental and others are prorated, you must choose "No, I'll do the math and enter only the rental related portion." In that way you can enter 100% of the upgrades but you will have to manually prorate the Mortgage Interest, Property Taxes, Insurance, etc. since they cover the entire building.

If every expense were, say, 50% rental and 50% personal, you could allow TurboTax to do the math.
Coleen3
Intuit Alumni

Duplex where there was cost exclusively allocated to rental unit

This is correct. This is what the IRS says:

If you rent part of your property, you must divide certain expenses between the part of the property used for rental purposes and the part of the property used for personal purposes, as though you actually had two separate pieces of property.

You can deduct the expenses related to the part of the property used for rental purposes, such as home mortgage interest, qualified mortgage insurance premiums, and real estate taxes, as rental expenses on Schedule E (Form 1040). You can also deduct as rental expenses a portion of other expenses that normally are nondeductible personal expenses, such as expenses for electricity or painting the outside of the house.

There is no change in the types of expenses deductible for the personal-use part of your property. Generally, these expenses may be deducted only if you itemize your deductions on Schedule A (Form 1040). Repairs to your personal portion are not deductible.

How to divide expenses.   If an expense is for both rental use and personal use, such as mortgage interest or heat for the entire house, you must divide the expense between rental use and personal use. You can use any reasonable method for dividing the expense. It may be reasonable to divide the cost of some items (for example, water) based on the number of people using them. The two most common methods for dividing an expense are (1) the number of rooms in your home, and (2) the square footage of your home.

Duplex.   A common situation is the duplex where you live in one unit and rent out the other. Certain expenses apply to the entire property, such as mortgage interest and real estate taxes, and must be split to determine rental and personal expenses.

Example.

You own a duplex and live in one half, renting the other half. Both units are approximately the same size. Last year, you paid a total of $10,000 mortgage interest and $2,000 real estate taxes for the entire property. You can deduct $5,000 mortgage interest and $1,000 real estate taxes on Schedule E (Form 1040). If you itemize your deductions, you can deduct the other $5,000 mortgage interest and $1,000 real estate taxes on Schedule A (Form 1040).

 

From <https://www.irs.gov/publications/p527/ch04.html#en_US_2016_publink1000219159>

 

 

 

 

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