It depends
Yes - If after you converted your house to a rental, the house was AVAILABLE for rent but just not rented until 2017, you will be able to claim rental expenses in 2016 from the day of conversion until December 31, 2016 under the rental section.
No - However, if after your converted your house to a rental, your house was not available for rent nor rented during all of 2016, you will not be able to claim any rental expenses in 2016
Information about allocating mortgage interest, insurance and property taxes in year of a home conversion -
When entering your
mortgage information, you can divide the amounts of mortgage interest, mortgage
insurance and property taxes between the number of days (or
months) the home was your residence and the number of days (or months) the
home was a rental property.
For example, if your mortgage interest is
$12,000 and your home was only available for rent for 5 months, then
$5,000 will be allocated to your rental (Schedule E) and $7,000 will be
allocated to your home mortgage interest deduction (Schedule A). Report each portion
separately under the corresponding section in TurboTax (see below).
Please note that if your home was available for
rent for 9 months but only rented for 5 months, you will allocate your
mortgage related expenses based on rental availability regardless of how
long it was actually rented. Using the example information, you would allocate
$9,000 (the months available for rent) to your rental property instead of
$5,000 (months actually rented). TurboTax will automatically allocate any
portion of the mortgage interest not available for use under the rental section
(Schedule E) to your personal deductions section (Schedule A) in this
situation.
