For property converted from personal use to rental in the middle of the year, how can split the property tax and mortgage interest (Itemized dedication vs expense) ?

[DS30]

Yes, divide the mortgage interest and property tax amounts and report them separately under each section (rental section and home section).

When entering your mortgage information, you can divide the amounts of mortgage interest, mortgage insurance and property taxes between the number of days (or months) the home was your residence and the number of days (or months) the home was a rental property.

For example, if your mortgage interest is $12,000 and your home was only available for rent for 5 months, then $5,000 will be allocated to your rental (Schedule E) and $7,000 will be allocated to your home mortgage interest deduction (Schedule A). Report each portion separately under the corresponding section in TurboTax (see below).

Please note that if your home was available for rent for 9 months but only rented for 5 months, you will allocate your mortgage related expenses based on rental availability regardless of how long it was actually rented. Using the example information, you would allocate $9,000 (the months available for rent) to your rental property instead of $5,000 (months actually rented). TurboTax will automatically allocate any portion of the mortgage interest not available for use under the rental section (Schedule E) to your personal deductions section (Schedule A) in this situation.

To enter your rental mortgage interest  (for TurboTax Online sign-in, click Here) in TurboTax Online or Desktop, please follow these steps:

1. Once you are in your tax return, click on the “Federal Taxes” tab ("Business" tab in TurboTax Home & Business)
2. Next click on “Wages & Income” ("Business Income and Expense" in TurboTax Home & Business)
3. Next click on “I’ll choose what I work on” (jump to full list or see more income)
4. Scroll down the screen until to come to the section “Rental Properties and Royalties”
5. Choose “Rental Properties and Royalties” and select “start’ (or “update” is you have already worked on this section)

Enter your rental property information through the TurboTax guided questions (or edit your rental property if it is already entered) until you come to a screen that is titled, Your "rental property name" rental summary.

Select to edit your rental expenses>I'll choose what I work on> click through several screen until you get to one titled "Report Mortgage Interest". Put your mortgage interest from Form 1098 here.

For any portion of your mortgage interest, insurance and property taxes related to your home use;

To enter your Mortgage Interest and Mortgage Insurance in TurboTax Online or Desktop, please follow these steps:

1. Once you are in your tax return  (for TurboTax Online sign-in, click Here), click on the “Federal Taxes” tab ("Personal" tab in TurboTax Home & Business)
2. Next click on “Deductions and credits”
3. Next click on "jump to full list" or “I’ll choose what I work on”
4. Scroll down the screen until to come to the section “Your Home”
5. Choose "show more", then Mortgage Interest, Refinancing and Insurance and follow the onscreen instructions.  

To enter your Property Taxes in TurboTax Online or Desktop, please follow these steps:

1. Once you are in your tax return, click on the “Federal Taxes” tab ("Personal" tab in TurboTax Home & Business)
2. Next click on “Deductions and credits”
3. Next click on "jump to full list" or “I’ll choose what I work on”
4. Scroll down the screen until to come to the section “Your Home”
5. Choose "show more", then Property Taxes and follow the onscreen instructions

Some additional notes:

For the mortgage interest - If rental was available for renting for 5 months, then divide and enter 5 months of interest under the rental section only (the other amount of interest will go under the personal section). If the rental was available for 5 month but only rented for 3 month with 2 months of personal use, still enter 5 months under the rental. However, in this case if 2 months of the interest are disallowed under the rental section, then these 2 months of interest will automatically transfer to the personal section (Schedule A).

For the Property taxes - Since all property taxes paid during the year, it really doesn't matter which of these 2 text fields you enter the information into. So just determine what property taxes related to the time you were in either home as your personal residence and put that under main home. The remainder can go under the additional property section. Just make sure the totals in the 2 fields equals the totals for all property taxes paid during the year on all properties.

[asif1530]

Using the hypothetical example (total mortgage interest is $12,000 and the home was only available for rent for 5 months)

For rental mortgage interest (Schedule E), in "Report Mortgage Interest" section in online Turbo Tax, should I enter the mortgage interest number ($12,000) in Form 1098 AS-IS  and assume Turbo tax will divide it automatically ?  The reason I am thinking this is because you said: "TurboTax will automatically allocate any portion of the mortgage interest not available for use under the rental section"

Or, should I divide it myself ($5000 + $7000 = $ 12000) and enter $5000 in the rental mortgage interest (not the original amount listed in Form 1098) ?

Similarly, when reporting the "home" mortgage interest under "Deduction and Credit", it asks me to put the detail of 1098 form. Here, should I put the original number ? or $7000 ?


Regarding property tax for home, there are two text fields, there are two fields
"Property tax on your main home"
"Additional home or Land"
I had two separate homes in 2016. I lived in house1 for 5 months. Then I rented it for the rest of year. Also, I bought house2 and lived there for last 7 months of the year.  In this situation, how should I fill out this two fields ?  Should I add full property tax for house2 and  70% property tax of house 1 and put that number in ""Property tax on your main home" ? Or, should I assume house2 to be main home and house1 to be "Additional home". Both were main homes at different times of the year.

[DS30]

For the mortgage interest - if rental was available for renting for 5 months, then divide and enter 5 months of interest under the rental section only (the other amount of interest will go under the personal section). If the rental was available for 5 month but only rented for 3 month with 2 months of personal use, still enter 5 months under the rental. However, in this case if 2 months of the interest are disallowed under the rental section, then these 2 months of interest will automatically transfer to the personal section (Schedule A).

For the Property taxes - Since all property taxes paid during the year, it really doesn't matter which of these 2 text fields you enter the information into. So just determine what property taxes related to the time you were in either home as your personal residence and put that under main home. The remainder can go under the additional property section. Just make sure the totals in the 2 fields equals the totals for all property taxes paid during the year on all properties.

[gunvir]

"TurboTax will automatically allocate any portion of the mortgage interest not available for use under the rental section (Schedule E) to your personal deductions section (Schedule A) in this situation"  ... This is FALSE. I entered in the amount of time I used a residence as a personal property and also the amount of time it was a rental, then I entered the TOTAL mortgage interest, think turbotax will "automatically"allocate the this as rental expense and as deduction. TurboTax did not do this for me. Luckily I double checked. Cmon Turbotax, this isnt that hard to automate. Atleast dont be misleading.

[brianc1]

This is confusing..   why would it not ask you and do the calculations!   I dont understand and no comment from turbo tax either????

[jferri]

When I manually enter the two values, Turbotax ends up showing a total mortgage interest amount that doesn't match the sum of the two values I entered, and doesn't match my 1098.

[personal_use_mortgage_interest]

Turbotax 2019 premier  DOES NOT properly AUTOMATICALLY calculate personal use to rental in the middle of the year correctly. I answered all the questions and put in my dates correctly and my mortgage interest amounts were COMPLETELY WRONG. I went to H&R Block this year because this was the first time I converted a property to rental mid year and they showed I owed $4K when Turbotax said $0!!!  I had to buy $200 in Turbotax software to actually see the IRS worksheets to figure out what was wrong. The SW should have done the allocation correctly and DIDN'T.  I am sure the IRS would have caught this and then three years later send me a bill for the $4K plus probably $2K in interest.

[personal_use_mortgage_interest]

Just went through all of these posts, and someone else discovered this LAST YEAR in 2019!!!!! Imagine all the people that TRUSTED TURBOTAX in 2019 being correct and now are paying the price with the IRS and now the same with 2020!!! I think this has the makings of a CLASS ACTION LAWSUIT AGAINST TURBOTAX. Imagine all the potentially hundred of thousands of people who trusted TURBOTAX SW, only to get a bill from the IRS saying their return was incorrect 3 years later and that they owe money PLUS INTEREST for the mistake. TURBOTAX SHOULD BE HELD ACCOUNTABLE FOR THIS!!!!!!