I have a 2 unit property. I live in one unit and rent out the other, which takes up 25% of the building. I've apportioned 25% of the mortgage interest paid, utilities, etc for the rental.
My question is: Should I do the same for purchase price and escrow fees (title insurance, transfer taxes, recording fees, etc etc)? Also multiply all of those by my 0.25 scaling factor?
I originally simply entered all the values as listed on my settlement statement as-is, but then when I was reviewing my forms before filing I noticed my depreciation calculation seemed way off. That affects passive rental activity gains / losses and has downstream effects that made my refund super huge. Which is great, but seems pretty wrong.
TTX says if you select that your rental is part of a multi family property where you also reside, you can just enter your totals for utilities, interest paid, etc and it will take a scaling factor that you enter and it will do all the math for you. It even says this is the recommended approach. But this does not extend to the purchase price / escrows, which seems like maybe an oversight on TTX's end.
Thoughts?
