Personal Use Days - How much can I deduct on my rental property?

[Anonymous]

From January to November, I lived in my home as my primary residence. In December, I bought another unit and moved there as my primary residence. Consequently, I rented out that first home for the month of December. When calculating personal use days, would I have to input 334 days of personal use and 31 days of fair rental on that first property?

Right now when I have just 31 days of fair rental use and 0 days of personal use inputted, it looks like the software is allowing me to take a full year of deprecation on my rental property and also is allowing me to take 100% of my repair expenses, all of which happened in the month of December when my unit was being rented out. Should I have to prorate these expenses to only 1 month out of the year, or am I allowed to take these full deductions since this is my initial year of renting out this property? Just as a side note, I plan on continuing to rent out this property in the future.

Thank you for the help.

[PaulaM · Accepted solution]

Think of your rental as a separate unit. You will be allocating some of your personal expenses between the rental and your personal deductions, such as mortgage interest, insurance, and property taxes.

If you rented your home for December, then enter 0 as the personal use days. The personal use days means did you use the rental personally after it was placed in service (like a vacation property).

On the page, Do Any of These Situations Apply to This Property?, mark the boxes for first year to rent and that the property was converted from personal use to a rental in 2016.

On the page, Was This Property Rented for All of 2016?, answer no, then enter the number of days rented after you moved out and your personal use days as '0'. 

[Anonymous]

Thanks for the clarification Paula!

On my tax return those boxes have been checked. I agree that the expenses should be allocated between my rental unit and personal expenses, however could you touch on the depreciation aspect as well? It's my understanding that you can't take depreciation for your personal expenses, so I'm not sure if I am allowed to take a full years worth of depreciation on my rental property even though I only rented it out for one month? The software right now is calculating it as a full year deduction, depreciated over 27.5 years, so I wanted to verify that was correct since it is a pretty substantial deduction.

Thank you!

[PaulaM]

No, you will have to apply the rental percentage to the depreciation as well. You should list the date the rental was placed in service. This should take care of the depreciation for just December. Next year, a full deduction.

[PaulaM]

See above.

[Anonymous]

Thank you for the help!

[PaulaM]

You are welcome 🙂