I think you are mis-interpreting the TTX screens. I lost count of how many times I've seen it over the years. I'll need to "walk you through it" from start to finish. So on the "Rental and Royalty Summary" screen, delete the entry entirely and lets start from scratch.
- Click the "Add another rental or royalty" button.
- Fill in the data on the "is this a rental property or royalty?" screen and continue.
- Select "single family home" and continue.
- Now select all of the following:
*2020 was the first year I rented this property
*I rent out part of my home
*I converted this property from personal use to a rental in 2020
*I converted this property from a rental to personal use in 2020
- Click continue. this puts you on the "Converting your home to a rental" screen. Read this screen. It clearly states that it will be asking you for expenses incurred *while it was a rental*. Click continue.
- Select NO, this property was not rented all year. Then for days rented enter 44.
- For days of personal use enter 0 (ZERO)
- Select NO I do not have a home office, and continue.
- Select YES I will enter total amounts and let TurboTax do the math.
- For rental use percentage, enter the percentage of floor space in your house that is exclusive to the renter. (I'm picking 25% for my fictitious scenario here.)
- click continue.
- Select YES I am an active participant.... and continue.
- Select NO, 1099 not required, and continue.
- Select enter rental info myself, and continue.
- Select none of the the above, and continue.
At this point you're on the rental property summary screen for this specific property.
- Elect to start/update the Assets/Depreciation section.
- "Do you have assets for this property that can be depreciated?" select YES and continue.
- "Did you buy items that cost less than $2,500 in 2020?" Select NO and continue.
- "Did you make improvements in 2020?" Select NO and continue.
- Select "Rental Real Estate Property" and continue.
- Select "Residential Rental Real Estate" and continue.
- In the "Tell us about this rental asset" screen, enter a name for this asset (such as "my home")
- Enter what you paid for the property in it's entirety when you "originally" purchased it.
- Enter what portion of what you paid for the property (portion of amount entered above) was for the land.
- Enter the date you "originally" purchased the property.
- Click continue.
- Select "purchased new" and "Yes, I've always used this item 100% of the time for business"
- Enter the date that you first started using it for business. I"m using July 1 2020 in my fictitious scenario.
- Click Continue.
- You're not done yet. On the Asset Summary screen click continue.
- Now click the Edit button next to the entry you just made.
- Click the Continue button 3 times. That should put you on the "Tell us more about this rental asset" screen.
- select "I purchased this asset new" and also select "This item was sold, retired, stolen, destroyed, converted to personal use....."
- For the "date you sold/retired it from use" enter 44 days after the date you first started using it in this business. (It's at the bottom of the screen). For my fictitious scenario, that date would be Aug 14 2020.
- On this screen you currently have selected "Yes, I've always used this item 100% of the time for this business". Change it to "No, I have not always used this item 100% of the time for this business"
- Select "I used this item for personal purposes before I started using it in this business"
- In the box for "percentage of time I used this item for this business in 2020" it currently reads 100%. 44 days is 12.05 percent. So change that number to 12.05.
- Click continue.
- Now you're on the "Special Handling Required?" screen. You absolutely MUST click YES on this screen. Please do so.
- You're now back to the "Your Property Assets" screen. The depreciation amount is correct now.
With my scenario, the math for the property taxes will work like this. Plug in your actual numbers.
Total property taxes paid in 2020 = $10,000
Multiply $10,000 by the percentage of floor space rented out (25% in my scenario)
10,000 X .25 = $2,500
Now multiply $2,500 by the percentage of time the property was classified as a rental in 2020. For my scenario that's 12.05%
$2,500 X .1205 = $301.25
The IRS rounds to the nearest dollar. So that's $301 in property taxes I can claim on SCH E, the remaining $9.699 is a SCH A itemized deduction.
Use the same math for property insurance, keeping in mind that there is no SCH A deduction for the property property insurance.
