Rental Type for attached newly constructed apartment

[Jflarabee]

Hello. I am having trouble deciding which type of property I have. It is a newly constructed, from the ground up, apartment that is attached to our main house with a separate private entrance. We have never personally used it. It has been 100% used as a short term rental since the project completion in 2024. I’m not sure if I should call it a single family house or a duplex where we live in one side or a vacation rental even though it doesn’t have any personal use days. I know shared expenses with the side of the house that we live in have to be allocated. What type of rental residence is this?

[DianeW777]

This is a separate apartment and you can use single family house since no personal use exits. You should use 100% rental use in 2024 and you will enter the date the asset was placed in service when you enter the asset. Since it is attached to your main residence, then you wouldn't need to enter any land value. TurboTax will calculate the correct depreciation by selecting 'Residential Rental Property'.

My advice is to calculate the personal and rental portion of any expenses that apply to both such as utilities, real estate taxes and mortgage interest. Enter the appropriate numbers into the rental activity and personal portion under itemized deductions, as you indicated.

[Jflarabee]

Thank you for your reply! What I am also wondering is: are taxes for a short term rental in a single family home attached to my main house, a duplex where I live on one side, part of my home that I rent, or a vacation rental figured differently? It seems that they all go on Schedule E, they all have allocated expenses with the main property that the host lives in if on the same property or attached to the main house, and they would all have the Basis for depreciation figured the same way. What am I missing? Why are there so many options in Turbotax? 

[AnnetteB6]

In general, the taxes are all calculated the same way, but there is a designated property type reported on the Schedule E included with your return.  

The only one that has a difference in the actual tax calculation is the vacation rental where there could be some personal use of the property.  If that is the case, then certain expenses are prorated between personal use and rental use.

The other different choices help TurboTax ask you the right questions so that you are entering the correct information for your situation.  

@Jflarabee