How to deduct mortgage interest on a primary residence that became a rental partway through the year

[jjhennessy]

Hello,

I own a home that was my primary residence for two months, vacant for eight months, then rented out for two months. Using the online version of TurboTax Premium for the 2024 tax year, I am able to enter the mortgage interest and property taxes as itemized deductions and include them on Schedule E along with the rental income, but it is unclear to me how to divide or pro-rate these deductions properly.

I have seen similar questions answered, but the TurboTax prompts relating to this scenario appear to have changed in the latest version, so any help would be very much appreciated!

[RobertB4444]

The system will ask you questions about personal use and fair rental days.  Once you have entered that information then it will do the math for you to split up your deductions between personal and rental.

@jjhennessy 

[jjhennessy]

Thanks so much for the help. I did provide the fair rental and personal use days; should a percentage of the mortgage interest and property tax then end up on my Schedule A form and/or these numbers be reduced on my Schedule E? I’m not seeing anything for this property on A unless I enter my 1098 for that mortgage, which appears to deduct the full amounts on both Schedule A & E.

[PatriciaV]

Unless this is an owner-occupied rental (like a duplex), you will need to allocate the mortgage interest and property taxes yourself. The situation is complicated because you converted the property from a personal residence to a rental. 

For the period when you occupied the home as your personal residence until you listed the property as available to be rented, calculate and enter that portion of the homeowner deductions under Deductions & Credits >> Your Home.

From the time you listed the property as available for rent until the end of the year, calculate and enter that portion under Rental Expenses.

Be sure to take note and read any blue "Learn More" links that appear during the interview for your rental property. This in-program guidance often answers your questions and provides examples.

Note that personal use days refer to any time you occupied the home while it was considered a rental property - but after you stopped using it as a personal residence. See IRS Pub 527 Property Changed to Rental Use.