Turbo tax improperly apportioning rental expenses incurred prior to property conversion to residence

[jb6619]

In 2022 we moved into our house after renting it out for the first ten months of the year.  While I understand that insurance, taxes and mortgage interest should be apportioned between the rental and personal uses, the software is also including on SCH E only 80% of repair expenses that were incurred strictly during the rental period.  How do I override this error?

[Carl]

Unfortunately, the program can't do everything, and when it does it gets some things wrong as you have seen. It's basically because of a lack of clarity for every possible scenario in the provided guidance as you work through the program. Either all expenses are apportioned, or none of them are.

You need to go back to the screen that asks "Was this property rented all of 2022?" and select YES. Then you need to manually apportion property taxes, mortgage interest and insurance. Then, all other rental expenses incurred and entered into the program will not be apportioned.

You'll still show the conversions to personal use in the Assets/Depreciation section.

[AmeliesUncle]

As Carl indicated, you need to make sure you say there were ZERO personal days.  It will then not prorate things, and the you MANUALLY prorate the mortgage interest and real estate taxes.

[Carl]

As Carl indicated

Actually, I wasn't as clear as I probably should have been on that. If you never lived in the property for one single day while it was classified as a rental, then the property was 100% business use with zero personal use days and was rented the entire year. The program (not you) will classify an entire year as being only the days the property and it's assets were "in service".

Can't think of a better way to explain it, but if a conversion either way (personal to rental or vice-verse) occurred during the tax year, then the "year" begins on the date the property was placed in service or converted from personal use to a rental, and ends on the date the property was converted from rental to personal use, or was sold/disposed of. That's another reason why it's so important to work through each individual asset to show the conversion or disposition.

*Those who claim to totally understand the situation and all aspects of it, is obviously not paying attention.*

[jb6619]

Thanks Carl.  I did manage to overwrite the improperly apportioned amounts on Schedule E but now those numbers appear in red.  Does that indicate there will be a problem when I go to file electronically?  If so, I can certainly adopt your suggested workaround.

[Carl]

Things being in red indicate you used the override function. Therefore, e-filing will not be possible. You'll have to print, sign and mail the return to the IRS. Same would hold true for a state return if applicable to your situation.