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posted Apr 9, 2021 12:19:52 AM

I own a duplex. I live in one unit and rent the other for the entire year. Am I obligated to split the property tax and mortgage tax among the units (schedule A and E)?

I originally entered all of my mortgage tax as an idemized deduction (sch A) and when I went back to split half against the rental income (sch E) I noticed the tax return drop. I would have expected it to increase.

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1 Replies
Level 15
Apr 9, 2021 12:41:46 AM

without allocating you would be misfiling and that can result in your taxes being higher than necessary. not only should 1/2 the interest and taxes show up as rental expenses on schedule E along with the rental income, but you must take depreciation on 1/2 the cost of the duplex after subtracting out the land value. failure to take depreciation will create a substantial problem if you sell the duplex. the taxable gain would have to be figured as if you did. 

 

special rules apply if your renting at less than fair market value