☰
✕
Sign In

Why sign in to the Community?

  • Submit a question
  • Check your notifications
Sign in to the Community or Sign in to TurboTax and start working on your taxes
New Member
posted May 31, 2019 11:43:37 PM

I refinanced home on 03/03/2016 and converted it to a rental property on 03/17/2016. How do I report 1098 forms, and how to I allocate the mortgage interest/insurance?

Just to clarify: From 01 JAN - 15 MAR 2016, the property was primary residence.  From 16 MAR - 31 DEC 2016, the property was a rental.

I received two 1098 forms due to the refinance on 03 MAR.  The second 1098 covers a period of both personal use and rental use.  How do I report/allocate the mortgage interest/insurance between personal use and rental?

0 1 565
1 Best answer
Expert Alumni
May 31, 2019 11:43:38 PM

The personal and rental use of the expenses will be allocated between the two separate categories.  Because you have two forms 1098, with one being 100% rental period interest paid, it's best if you select 100% rental use of the property do not select that is was converted in 2016.  Use only the rental expense portion of the Form 1098 in the rental entry.  This is to insure that you get your full rental deduction of all mortgage interest.

You can simply prorate that interest using the months of rental use. (interest / 12 months x 9.5 months rental use). Enter the balance on your itemized deductions.  Use the same formula for the property taxes 

When you add your house as an asset, the date purchased/date placed in service should be March 15th.  The depreciation expense will calculate appropriately.

In your TurboTax Premier account follow these steps.

  1. Sign into your account and go to the tax return.
  2. Select My Account in the upper right > Select Tools > Then Topic Search > 
  3. Seach for rental > Go (image attached)
  4. Continue to edit or update the property
  5. Select Property Profile go to the screen asking about the situations - review
  6. Select any that apply or "None of the above"
  7. Continue - the next screen select "Yes" this property was rented all year.
  8. Click the screenshots attached to enlarge and view for assistance.

1 Replies
Expert Alumni
May 31, 2019 11:43:38 PM

The personal and rental use of the expenses will be allocated between the two separate categories.  Because you have two forms 1098, with one being 100% rental period interest paid, it's best if you select 100% rental use of the property do not select that is was converted in 2016.  Use only the rental expense portion of the Form 1098 in the rental entry.  This is to insure that you get your full rental deduction of all mortgage interest.

You can simply prorate that interest using the months of rental use. (interest / 12 months x 9.5 months rental use). Enter the balance on your itemized deductions.  Use the same formula for the property taxes 

When you add your house as an asset, the date purchased/date placed in service should be March 15th.  The depreciation expense will calculate appropriately.

In your TurboTax Premier account follow these steps.

  1. Sign into your account and go to the tax return.
  2. Select My Account in the upper right > Select Tools > Then Topic Search > 
  3. Seach for rental > Go (image attached)
  4. Continue to edit or update the property
  5. Select Property Profile go to the screen asking about the situations - review
  6. Select any that apply or "None of the above"
  7. Continue - the next screen select "Yes" this property was rented all year.
  8. Click the screenshots attached to enlarge and view for assistance.