How do you claim mortgage interest on Schedule E for property that was converted to rental for 184 days of the year? The full amount from 1098 or basically half of that?

[bdinsmor]

I think I made a mistake on my Schedule E form for last year's return after starting to do this year's taxes.  I would like to know how to calculate the amount of mortgage interest that I should list on the Schedule E if my home was personal for 180 days and converted to rental for 184 days.

[ColeenD3]

If you convert your home from personal property to rental, you would first need to indicate that in the program. You would prorate the mortgage for the number of days it was used for each purpose. 2020 had 366 days due to being a leap year. 

184days/366 days give you the ratio for rental. The balance is considered personal. You would need to apply this ratio to all your rental expenses.

[bdinsmor]

Thank you for that explanation!!

For the schedule A form do I list the full amount from the 1098 or just the balance that was for personal?

[ColeenD3 · Accepted solution]

For Schedule A, just the personal portion.

[LindseyM84]

Since you are putting in a different amount than what is on your 1098, do you check the box that says this amount is different? and then explain why? I am doing this too, and just want to make sure that I am covering my bases.

[JamesG1]

You should check the box and explain the calculation or retain a copy of your calculation with your tax papers.

For instance, if you converted personal to rental on March 1, your expenses would be allocated 60/366 to personal and 306/366 to rental expenses.

1098 Box 1  $5,000

Personal on Schedule A $5,000 x 60/366 = $820

Rental on Schedule E     $5,000 x 306/366 = 4,180