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If you use the non-online version of TurboTax (CD/Download) then go to the tax data button on the toolbar. Search for "percentage". Find your owner occupied rental under "Schedule E Wks" and select the "percentage rental use" and select "go to form". Find the section that says "Owner-Occupied Rentals:" and on item P check the box for "Check to allocate personal use items to Schedule A". Under item Q for "Percentage of Rental Use" put the percentage of rental use. For instance, if 4 rooms of your house out of 7 rooms are a rental, put in 57.1428%. Then on the tax software, enter the full values for expenses, depreciation, etc. and the software will do the work for you. Just realize that if you spent money specifically for the rental rooms, this will not correctly expense those as 100% against the rental rooms and will allocate a percentage to the entire house. If you have this situation, you will unfortunately manually have to keep track of which expenses are for the rental rooms and make sure 100% of those expenses are taken into account and for expenses that are general to the entire house, you take the percentage.
I wish the software would be upgraded to ask you questions to facilitate this as this has been broken for years now. I wonder what TurboTax software developers are doing all year. I wish in addition to modifying their software for changes to tax rules, they'd fix bugs and defects and improve the software. Regardless, I still love it.
It appears that the Let Us Calculate Your Expense Deductions for You prompt will only appear when you select that you have rented out the unit for the entire year. This is allowable even if the unit was not rented out the entire year if it's the first year you've rented the unit, as noted previously. If you do anything else, TurboTax will not provide the "Let Us Calculate" prompt.
Frankly, I don't trust TurboTax to do this calculation properly. I originally was going to allow TurboTax to do the calculation and had selected this option and entered the SqFt ratio for the rental portion on my home. When I noticed issues and tried to change the selection to "No, I'll do the math and enter the rental-only portion", I couldn't get the prompt back. That's because I'd changed my response to the "entire year" question to "no". Once I changed it back, I got the prompt again.
Frankly, I don't trust TurboTax to do this calculation properly.
I never have trusted it, since I identified an issue several years ago which to date, has yet to be fixed or addressed.
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