I have mortgage interest on a home that was first our main home for 118 days and then was a rental. What interest is included in the Schedule E and what in Schedule A?

[espencerito1]

I only have one mortgage for the house. I entered in the percentage of mortgage interest for Schedule E. TurboTax is saying all of the interest is for deductions on Schedule A.

[DianeW777]

First, calculated the days the home was available for rent, then divide that by total days in the year (366). Use the percentage you calculated times the mortgage interest and real estate taxes. Enter these figures in your rental Schedule E and the balance as itemized deductions on Schedule A.

Note: From the day you converted the property to a rental activity it was used 100% for that purpose assuming it was not converted back to personal use. You should split any expenses yourself to make things clear and simple such as insurance, utilities, repairs, etc. Be sure to enter the full cost basis including land, then enter land when requested. TurboTax will calculate the proper depreciation for the building only. 

For any expenses directly related to the rental period you should enter 100% of the expense.

[espencerito1]

Thank you. How do I enter the Schedule A balance portions into TurboTax? It is quite self explanatory for the Expenses part of the rental income section (Schedule E content), where I enter in the calculated rental portion numbers manually. But the Deductions section asks for exact 1098 information and I can't adjust the amount for either property tax or mortgage interest to only include the balance left after the rental portion. Does TurboTax adjust for it automatically using the rental ratio from Schedule E?

[DianeW777]

Yes, you not only can adjust the amounts, you are required to do so. It is perfectly correct to enter the home portion only in your 1098 for your itemized deductions. Enter the numbers that accurately reflect the main home portion of those expenses (interest and property tax).

TurboTax will not adjust it if you followed the instruction earlier. You can trust the advice for accurate numbers on your tax return, both in the rental section and the personal itemized deductions section. See the instructions below to make sure your numbers are accurately reflected in both.

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