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Rental property and primary residence mortgages rolled into one loan, how do I claim mortgage interest on the rental property? I only got one 1098 for the combined loan.

How to separate rental property mortgage interest from a combined loan including my primary residence?

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Rental property and primary residence mortgages rolled into one loan, how do I claim mortgage interest on the rental property? I only got one 1098 for the combined loan.

You need to manually calculate the amounts.

For example, lets say the total loan is for $500,000, and $200,000 was use for "acquisition debt" (purchase price and improvements) to your main home.  Let's also say that $250,000 was used for rental purposes and $50,000 was used for other things.

That means that 40% ($200,000 divided by $500,000) of your interest is allocated for your personal mortgage interest, 50% ($250,000 divided by $500,000) of the mortgage interest is allocated to rental expenses, and 10% ($50,000 divided by $500,0000) is allocated for 'other' interest.

So for 2017, you can enter 50% for rental interest and 50% for personal mortgage interest (assuming the 'other' loan amount is less than $100,000).

For 2018, you can enter 50% for the rental interest and 40% for personal mortgage interest (the 'other' interest is no longer deductible starting in 2018).

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3 Replies

Rental property and primary residence mortgages rolled into one loan, how do I claim mortgage interest on the rental property? I only got one 1098 for the combined loan.

Which property is the mortgage actually on?

Rental property and primary residence mortgages rolled into one loan, how do I claim mortgage interest on the rental property? I only got one 1098 for the combined loan.

Sorry, the mortgage is on my primary home.

Rental property and primary residence mortgages rolled into one loan, how do I claim mortgage interest on the rental property? I only got one 1098 for the combined loan.

You need to manually calculate the amounts.

For example, lets say the total loan is for $500,000, and $200,000 was use for "acquisition debt" (purchase price and improvements) to your main home.  Let's also say that $250,000 was used for rental purposes and $50,000 was used for other things.

That means that 40% ($200,000 divided by $500,000) of your interest is allocated for your personal mortgage interest, 50% ($250,000 divided by $500,000) of the mortgage interest is allocated to rental expenses, and 10% ($50,000 divided by $500,0000) is allocated for 'other' interest.

So for 2017, you can enter 50% for rental interest and 50% for personal mortgage interest (assuming the 'other' loan amount is less than $100,000).

For 2018, you can enter 50% for the rental interest and 40% for personal mortgage interest (the 'other' interest is no longer deductible starting in 2018).

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