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If renting a room of our house, where do I enter the percentage of the house, either by square foot or by room count?

I have reached the Income end expense/asset portion but the expenses are the total for my house.  Or do I externally calculate the portion I want to apply to the rental, of say Mortage interest and property taxes?
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3 Replies

If renting a room of our house, where do I enter the percentage of the house, either by square foot or by room count?

Percentage by square foot.

If renting a room of our house, where do I enter the percentage of the house, either by square foot or by room count?

Hey, thanks for replying.  Not the question though.  I get that you can set the ratio by percentage of rooms rented or by percentage of square foot.  I don't see anywhere to enter this in Turbotax.  I already did  my deductions and entered the mortgage interest, insurance, property taxes under my personal deductions.  Now I am entering my rental income and it asks me for the same info.  I want enter what percentage to distribute from the data already entered, but I can't find that anywhere.  How does tubotax handle this split?

Carl
Level 15

If renting a room of our house, where do I enter the percentage of the house, either by square foot or by room count?

I get that you can set the ratio by percentage of rooms rented or by percentage of square foot.

Where exactly do you get that? It's percentage of square feet, not percentage of rooms.

I already did my deductions and entered the mortgage interest, insurance, property taxes under my personal deductions.

That was a bad move. The program will automatically split those things for you, provided you use the program the way it is designed and intended to be used. Then, you'll deal with the rental stuff first. When you get to the Deductions & Credits tab you'll see there that your property taxes and mortgage interest amounts are already there in the "Your Home" section and the program has already pro-rated the amounts for the period of time the property/room was not classified as a rental.

 

Now I am entering my rental income and it asks me for the same info.

You're not selecting all the items that you need to select. Some screens you select "the one" the applies, and on others you select "all" that apply.

You "really" need to start over here. Go into the Rental and Royalty Income section of the program and just delete the rental.  Then select to Add Another Rental or Royalty.

 - Is this a rental propety or royalty?  Select Rental, Complete the rest of that screen and continue.

 - What type of rental is this? Select Single Family Home and continue.

- Do any of these situations apply to this property? You will select three check boxes on this screen.

   1) 2020 was the first year I rented this property.

   2) I rent out part of my home

   3) I converted this property from personal use to a rental in 2020

Then continue.

- Read the information presented, then continue.

 - Was this property rented for all of 2020? Select NO. Then enter the days it was rented. Then for the days of personal use enter the digit ZERO. (Read the note below that!)

- Do you have a home office? Select NO. A home office is not allowed for residential rental real estate. So you have to select NO. Then continue.

- Select YES, I will enter total amounts and let TurboTax do the math. Then enter the percentage of floor space that is exclusive to the renter. Then continue.

- Lets find out if you are an active participant. Select YES and continue.

- Did you pay anyone $600 or more....     Select NO and continue.

- Select to enter my rental info myself, and continue.

- Select None of the Above, then continue.

Now you're back on the summary screen. Go ahead and work through and enter your rental income, as well as your rental expenses. A NOTE OF WARNING HERE. In the expenses section you will only enter the expenses incurred for the *entire property* starting from the time you converted that room to a rental. So if you converted it to a rental on 7/1/2020, any and all expenses incurred before that date *are* *not* *included* in your totals. When done with rental income and expenses, you'll next move on to assets/depreciation.

- Elect to start/update Assets/Depreciation

- Do you have assets for this property that can be depreciated? Select YES and continue.

 - Then select NO and continue.

 - Did you make improvements...? Select NO and continue.

 - Select Rental Real Estate Property, and continue.

 - Select Residential Rental Real Estate, and continue.

 - Tell us about this Rental Asset. Enter a description, followed by total cost you paid for the property when you originally purchased it, plus the cost of any property improvements you paid for since you originally purchased it. Then enter the value of the land. Finally, enter the date you originally purchased this property, even if it was 50 years ago. Then continue.

- Tell Us More About This Rental Asset. Select "I purchased this asset new" and select "No, I have not always used this item 100% of the time in this business."  Then under that select "I used this item for personal purposes before I started using it in this business."

- For "date I started using it in this business" enter the date you converted it to rental property.

- Now here's the tricky part that will get people in *your* *specific* *and* *explicit* *situation* every single time, if they don't pay attention.

The question being asked is "Percentage of time I used this item in this business in 2020. (e.g. 80%)". That is the *wrong* question for the program to be asking you. It should be asking you "Percentage of floorspace that is exclusive to the renter.". So in this box do not enter the percentage of time. Instead enter the percentage of floor space.

The program already knows the percentage of time, based on the date you entered in the box directly above this. It does not know the percentage of floorspace that is rented, until you enter the precentage of floor space in the box that is wrongly asking you for percentage of time.

But Carl! I already entered percentage of floor space earlier before!

Yes, you did. That was near the beginning in the Property Profile section. That percentage is used solely for determining the percentage  of your household expeneses, along with percentage of mortgage interest, property taxes and property insurance gets split between the SCH E for the rental portion for the period of time that portion was classified as a rental, and the SCH A for the personal use portion of your property. That particular entry in the Property Profile section is not used for figuring the amount of depreciation you are required to take by law. Depreciation is based on the date it was converted to rental, and the percentage of floor space that was classified as a rental after that date you converted it to a rental. So you have to enter the percentage of floor space in this box, and not the percentage of time. If you do otherwise, your depreciation for that first year will just flat out be wrong, and that will make it wrong for every single year after too.

So where it asks for percentage of time, enter percentage of floor space. Then continue.

You should be able to take it from here. If you have further questions, by all means, ask.

 

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