Primary residence converted to rental - mortgage interest -

[rnathani12]

Hello, 

We had to move out of state for a job and as a result we had to rent our primary residence of over 2 years for rent for half of 2024. 

During the rental income section- turbo tax asked for total mortgage interest and split the interest based on days used for personal use and rental. The later portion of the mortgage interest was deducted from my rental income which is good. 

However when it came to deductions section for mortgage interest to claim on itemized deduction, turbo tax asked if the home was a primary residence, second home or rental. What is the right answer? 

We have not bought a second home and a renting while our primary is being rented out. 

If I select second home , I see the mortgage interest has double counted the difference of interest from the rental income section. Please help. 

[DavidD66]

If you were renting out the entire house, you would not enter days of personal use.  If your house was a rental for the first half of 2024, the you would "dispose of" the rental property by indicating it was converted to personal use.  You will enter 100% of the expenses for the period it was a rental (e.g. insurance, maintenance).  Something that is paid annually, like property tax would be allocated.  You would report half as a rental expense and half as an itemized deduction.  For the interest, make two separate entries - one for the rental and one for the personal residence period.

[rnathani12]

Thank you DavidD66.  I need some clarification for mortgage interest portion for personal residence period, do I need to classify the residence as primary residence? and also the mortgage amount is directly getting imported from 1098 , do I need to reduce it proportionately and check this option "The interest amount I entered is different than what's on our 1098."?

[AmyC · Accepted solution]

Yes and yes. You need to do the math. Let's say  for example, you have $10,000 of interest paid while it is a rental, that goes on the rental Sch E. Then $8,000 was paid while it was your main home, that goes on Sch A. You will need to enter both numbers to show correctly on their forms. You can still say primary home for Sch A but you can't take more than your share while it was your primary home.

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