Owner occupied rental property and personal use days

[carmencitalirio]

I rented out a room in my house for part of the year. I indicated that it is owner occupied rental property. Since I only rented it out for part of the year, I put 187 in days rented, and 178 personal use days. However, Turbo Tax keeps giving me an error and won't let me submit saying personal use days should be zero. Is that correct? Should I put 0 personal use days even though I only rented it out for part of the year?

[PattiF · Accepted solution]

Check the option that "I rent out a part of my home", and select "No, this property was not rented all year", and do not put any number in the box for personal days.

Mortgage interest and property taxes are divided between personal (Schedule A, itemized deductions) and rental use (Schedule E) proportional to the number of days used for each and square footage rented.

Your formula is as follows: square footage of rental space/ total square footage of house times days rented/365 to be allocated as a rental expense

For instance, if you have $10,000 in mortgage interest and rent 25% of your floor space for 6 months, multiply 10000 x .25 x .5 = $1250 to allocate as a rental expenses. the balance as a Schedule A, itemized deduction.

So, you will enter a portion of mortgage interest and property taxes in both areas.

To enter personal mortgage interest and property taxes:

• Type in mortgage interest in the search box, at the top right of your screen
• Hit the Enter key
• Click jump to mortgage interest in the search results
• Follow the prompts and online instructions
• To enter rental expenses, type in rental property and follow the above instructions

[AmeliesUncle]

TurboTax can't double-prorate things.  But first let's figure out your situation.

You said it was rented for part of the year.  What about the other part?  Was it available for rent?  Was it used for personal purposes?  Something else?

[carmencitalirio]

It's my home, so I was just living in it. It was available for rent for a few months before I found a renter.

[AmeliesUncle]

So it was not available for rent all year?  Was this the first year it became available for rent?  Will you be renting it out in 2022?

[carmencitalirio]

That's correct. It was not rented all year long, it was the first year I made it available for rent. It is available for rent in 2022 (and is currently still occupied by a renter along with me in the home).

[AmeliesUncle · Accepted solution]

Assuming this is a long-term rental (rather than a situation where you rent for a short time, then use it personally for a while, then rent again, etc.), then PattiF's response is great.  DON'T enter any personal days.

For a partial year like this, the owner-occupied section can get messy, and I would not recommend using it.  I would recommend manually prorating things between the rental section and the personal itemized deduction section (you need to prorate BOTH on the partial year, as well as the portion of the home).

For a full year of rental, then using the owner-occupied section works fairly well.

[carmencitalirio]

Thank you thank you! So helpful!

[Carl]

A few things to note:

Three items "must" be selected on the Property Profile.

- 2021 was the first year I rented this property.

- I rent out a part of my home.

- I converted this property from personal use to a rental in 2021

On "was this property rented all year?" select YES.

On "let us calculate your expense deductions for you" select NO. (The program does not and can not correctly allocate everything. So you should do it manually.)

Once you have finished the rental section completely, double-check that the depreciation is correct. My bet is, it won't be.

See IRS Publication 946 at https://www.irs.gov/pub/irs-pdf/p946.pdf  and use the worksheet that starts on page 37.  The table that applies is Table A-6 on page 72.