Schedule E: Owner-Occupied Rentals, Percentage of Rental Use

[bambam75]

I'm at a loss as to why Turbo Tax didn't calculate or help calculate this for me!

During the federal review, I have to determine the percentage of rental use for my vacation rental. Is  this referring to:

• The square footage of the rental unit
  • 50% (both units are about equal in square footage)
• The actual days rented
  • 23 days
• The time it was not used personally during the seasonal rental period
  • 153 days

Any advice would be greatly appreciated!

[ColeenD3]

If the entire unit was rented, you do not need square footage. It is strictly divided by the number of days. 

If you had a portion of your home rented for a portion of time, then you would need the extra calculation You need to do the math yourself.

Please see this answer from Marketstar:  PY Rental

Mortgage interest and property taxes are divided between personal (Schedule A, itemized deductions) and rental use (Schedule E) proportional to the number of days used for each and square footage rented

Your formula is as follows: square footage of rental space/ total square footage of house times days rented/365 to be allocated as a rental expense

For instance, if you have $10,000 in mortgage interest and rent 25% of your floor space for 6 months, multiply 10000 x .25 x .5 = $1250 to allocate as a rental expenses. the balance as a Schedule A, itemized deduction.

So, you will enter a portion of mortgage interest and property taxes in both areas.

[bambam75]

Oh, ok. I was very confused about the mortgage interest part as well. Thanks so much for the quick reply!