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NYANIK
New Member

Primary Residence Converted to Rental mid year

We converted our primary residence (townhome) to a rental property in the middle of 2023 and grabbed a new primary residence.  In the Income Section of our tax return, I've entered the requested information (mortgage interest, maintenance costs, etc. and the number of days the house was rented out of the year).  My question is, do I also enter the mortgage interest for the townhome also in the deduction section as well?  If not, how does Turbo Tax get me the interest deduction for the 6 months we lived in the townhome before we converted it to a rental?

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2 Replies
maglib
Level 11

Primary Residence Converted to Rental mid year

@NYANIK   when you went through the rental interview it asked if you wanted to enter actual or allow the program to do the expense allocation.   These are numbers you should have entered:

Days of Personal Use -  ZERO. Read the screen. It is number of days after it was converted to rental, not before.

Business Use Percentage. 100%.

Number of days Rented - count for this starts from the first day a rental was "in service" date or after if you were asked for that. Vacant periods between renters do not count for actual days rented. Please see IRS Publication927 page 17 at https://www.irs.gov/pub/irs-pdf/p527.pdf#en_US_2020_publink1000219175 Read the “Example” in the third column.

I normally just enter only related to the rental there and NOT the totals as not everything should be allocated based on number of days.

So you do need to enter it in both parts but only the % that was personal and do not allow the program to allocate for you.

Helpful information 

https://turbotax.intuit.com/tax-tips/rental-property/real-estate-tax-and-rental-property/L3e09vT71

**I don't work for TT. Just trying to help. All the best.
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Carl
Level 15

Primary Residence Converted to Rental mid year

From what I've deduced, vacant periods of any time after the property is placed in service, as well as vacant periods between renters do not count against you. The only thing that counts against you is days of personal use "after" the property is converted to a rental.
But there's one thing I've also noticed. For those that place a rental in service close to the end of the tax year, say the last week of december for example, and don't actually get it rented out until the next year, the program will not accept zero days rented. You have to enter at least 1 day rented for it to work. In this scenario, reporting $0 income for the year is not an issue, assuming the first month's rent was not paid until after the end of the year.

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