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mweldon10
New Member

Mortgage interest on rental

I lived in house for 8 months, empty for 1.5 months and rented for 2.5 months.  Mortgage interest is $3818, how is this split up between federal deductions and rental properties?
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2 Replies
Phillip1
New Member

Mortgage interest on rental

As you enter your rental expenses into TurboTax, the program will have a page in the rental section that asks "Do Any of These Situations Apply?". On this page, indicate that you converted a home to a rental property. This will trigger TurboTax to ask questions about how many months you lived in the home and rented the home. With that information, the program will give you the option to calculate the deductions yourself or let the program make the calculations for you. 

For expenses in the year that you covert a residence to a rental property, you must calculate a business and personal portion. The rental period is the number of months the home was ready to be rented. So if any of the 1.5 months included time the rental was vacant waiting for tenants, you will count that as business portion. Your business portion would be 2.5 or possibly 4/12 or 20.83% or 33.3% respectively, and the personal portion would be 79.17% or 66.7%. You would deduct your mortgage interest on the rental portion as 795.28 or 1,271 dependent on the rental months, and on your itemized deductions you would deduct 3,023 and 2,547 dollars.

mweldon10
New Member

Mortgage interest on rental

Does the 33% apply also to the real estate taxes or do I just enter the whole amount in the rental property section?
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