Primary Home. 1 bedroom Rented. How is this filed?

[jguth001]

I live in my primary home, and I also rent out a room full-time (all year). The house is occupied by three people, me, my wife and the renter.  So roughly 1/3rd of the property is used by the renter.  I got a 1099K from an online service. How do I file properly?

How do I enter mortgage/tax/interest/insurance/maintenance/etc. expenses?

[Vanessa A]

I am assuming since you received a 1099-k this is an unrelated party and you are renting at fair market value. 

This will be entered as rental income on Schedule E.  So to file you will need TurboTax Premiere or  higher Desktop or TurboTax Premium Online.

To enter the Rental income and expenses select the following:

1. Federal
2. Wages and Income
3. Rental Properties and Royalties
4. Walk through the steps answering the questions as they apply to you
5. When you get to the question regarding what type of property you can choose single home (if that is the type of home you live in)
6. Then on do any of these situations apply select I rent out part of my home
7. You will then be given the option to enter your expenses.  You can select enter the full amount and let TurboTax calculate for you or you can calculate the amount that applies to the rental portion.
8. You will also be able to list your house as an asset for depreciation even though it is just a room, the property would still be subject to depreciation. 

If the tenant has full use of the house, then yes, you can split everything by 3 and apply 1/3 of the bills to the rental.  If the tenant does not have full use of the house, then you may need to do a little more calculating.  

For instance, if the tenant is only allowed to use the bathroom and kitchen in the basement and pretty much lives in the basement, then you would only be able to include the portion of the house that they have access too.  So if your basement is 500 sq. ft and your house is 2,000 sq. ft, you would then apply 25% of the bills towards the rental.

After you enter the expenses, you will continue through to enter the rent received.  You can select the 1099-K and enter the amount in the box for the 1099-K

Be aware that if you are itemizing your return, you cannot claim the full amount of mortgage interest and property taxes as itemized expenses if you are claiming 1/3 of it as a rental expense. 

Note:  If you are renting this room not at Fair Market Value, then your expenses are limited to your income from the property.

[jguth001]

Thank you for the information! This is helpful. 

This is where I stand:

1. I have entered the income and expenses (1/3rd of all costs like Taxes, Premiums, Repairs, Interest, Maintenance, etc.) information on the Schedule E.
2. Now, I am confused as to how the Mortgage interest in the Deductions & Credits section is entered.  Do I enter 2/3rd of the amounts? 

[MelindaS1]

If you have entered 1/3 of the mortgage interest into the Schedule E interview screens, then you can enter the remaining 2/3 in the Individual Deductions & Credits 1098 menu. As long as the values are not higher than what you received on Form 1098, this won't be an issue for reporting purposes. 

However, if you're worried about your manual calculations, TurboTax is able to do the math for you instead. As long as you indicate in your Schedule E/Rental Property entries that a certain % of your own home was rented and input that %, TurboTax will then split the total interest between Schedule E and Schedule A based on the relative % for rental and personal use, respectively. In this case, you would enter the full mortgage interest expense into Rental, and your 1098 data as received. 

More discussion and information: Allocating Mortgage Interest Between Home and Rental.