My niece is a tenant in my mortgaged home. For her room, 17% of home sq', can I claim 17% of the mortgage interest on schedule E and 83% on schedule A?

[AmeliesUncle]

If it was rented the entire year, yes.

[Mike9241]

not only does she have to pay rent but the rent paid must be fair rental value

then not only can that portion of the mortgage interest be taken on schedule E but also a pro-rata portion of other expenses like utilities and you must take depreciation on that portion.

[marcjy1]

Thank you, on my taxes last year I applied the 17% to the expenses of her room on Schd E.

My taxes show a 33% depreciation on my home.

Do I apply that 33% on the room's expenses?  I don't understand.

[marcjy1]

I'm sorry, what I meant was that on a graph in my 2020 tax return, current depreciation is "330."

[DianeW777]

When you calculate the square feet of the room your niece is renting, and if that is the only area of the home that she is allowed to use, then you would also use that square feet and divide it by the total square feet of the home (including her room) to calculate the percentage of rental use.  

Once you arrive at the percentage, this will apply to all expenses that are for the entire house for the rental portion (real estate taxes, mortgage interest, utilities, home owners insurance, as examples).

You will also use this to tell TurboTax what percentage of the home is for the rental unit.  Keep in mind our awesome tax expert @Mike9241 explained that the rent must be at fair rental value (FRV).  This means exactly what you would charge a stranger if you were renting the room to anyone. If this is the case then say 'Yes' it was always rented at FRV.

It may work best if you calculate the expenses and depreciable cost basis (total cost of home including capital improvements OR fair market value (FMV) on the date you began renting it whichever is LESS) yourself.  Sometimes this gets complicated for the software.

The land should be separated out from the building itself because land is never a depreciable but rather an appreciable asset.  The tax assessment usually shows an amount for the building and land separately.  You could use this by taking the land and dividing it by the combined total to arrive at the land value of the cost basis (FMV or actual cost).  Enter the correct amount of any prior depreciation you did use on past returns.

Please update here if you need further assistance.

[Carl]

My taxes show a 33% depreciation on my home.

Can you clarify that? That seems so far "out there" and off base. At best, only 3% of the structure value is depreciated each year. In your case, only 17% of that 3% would be deductible as depreciation.

To understand where I'm coming from, see IRS Publication 946 at https://www.irs.gov/pub/irs-pdf/p946.pdf

Use the worksheet that starts at the bottom of page 38. The table that applies is table A-6 on page 73.

My guess is that what you figure manually and what the program figures will be vastly different.

[tagteam]

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@Carl wrote:

My taxes show a 33% depreciation on my home.

Can you clarify that? That seems so far "out there" and off base........

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You did not read the very next post by this user:

"I'm sorry, what I meant was that on a graph in my 2020 tax return, current depreciation is "330.""