Do I need to prorate rental expenses and property taxes?

[Wookie_Bender]

I was replying to the first post by DianeW777.

[Carl]

This contradicts Carl's post, which instructs the user to enter the full amount of the property tax bill in the rental expense section, which TurboTax will then allocate between Schedule E and Schedule A.

When renting a part of your home, you have a choice to either let the program do the splits "for you", or you can do them manually.

If you elect to have the program do the splits "for you", it's important to understand the program does not and can not "CORRECTLY" split everything in every situation. For example, since property insurance is not deductible for the personal use portion and therefore can not be claimed anywhere on the tax return, the program can not and does not pro-rate the property insurance. You still have to do that manually. If people would read the small print on each and every screen, they would no that. But it's rare for people to do that. Therefore, I suggest folks to do the splits all manually. Typically, this manual process is only needed in the first year. After that, the only thing that "I know for a fact" they will have to split manually each and every year, is the property insurance, since it gets prorated for the SCH E only.

[Wookie_Bender]

Sorry Carl, I've been unable to locate the small print or the option to split "for you" that you describe. TurboTax simply says "Total up all real estate taxes and enter them below", with no other buttons or details.

Just to clarify: my rental property is not a subspace of my own residence; rather, it is a single-dwelling, single-family home that was purchased midway through the year.

Just to confirm: I can safely enter the full amount of its annual property tax bill, and TurboTax will allocate that between Schedule E and Schedule A based on the "available date" I entered in the Assets section, correct?

[Anonymous_]

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@Wookie_Bender wrote:

Just to confirm: I can safely enter the full amount of its annual property tax bill, and TurboTax will allocate that between Schedule E and Schedule A based on the "available date" I entered in the Assets section, correct?

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Doing as you described should result in your depreciation deduction being calculated properly.

[wendywang]

I bought rental property in Sep 24 and paid property taxes 10K in 24. Prorate rental property tax 4K as expense (4 months).  what happen to 6K property tax? 

[RobertB4444]

You don't need to prorate the taxes over the months that you didn't own it.  If you paid it and it was available for rent every day that you had it then you take the entire property tax deduction.

You would need to prorate it if there are days that it was not available for rent.  So if between September 24 and December 31 there were days that you were fixing the place up and couldn't rent it then the portion of the property taxes from those days goes on your schedule A as itemized deductions.

@wendywang 

[wendywang]

thanks.  closing doc has credit from seller for 2 months.  10k- 2 months credit for property tax deduction or 10K for property tax deduction?  

[RobertB4444]

If it was available for rent all of those days or if you bought the property while it was already rented then 10K for the deduction.

@wendywang