The below clarifies things better than the program does. But it's geared towards the rental of an entire property and not just a room. So I'll start off with a few additional clarifications you need for your specific situation. First I am assuming you desired to have a renter physically in the space and paying you rent starting from the first day the room was "available for rent" through the remainder of the year and possibly beyond into the next year.
Utilities are split but I pay the full HOA and cover insurance,repairs, taxes etc.
Every penny the rental pays you for ANY REASON is rental income. So if you are splitting the utilities that means your rental income varies every month. For example, I seriously doubt that your electric bill was "exactly" the same each month. So your rental income includes whatever amount the renter paid you for their share of the utilities and anything else they paid you for.
Now, here's how you'll answer the questions in TurboTax.
- Was this property rented all year? If the property was *not* available for rent on Jan 1, 2018 then the only correct answer to this question is NO. Then on that same screen you're asked two more questions:
a) Days rented at fair rental price - The day count starts on the first day a renter *COULD* have moved in and ends on the last day the property was "available for rent". So if the renter moved out in Oct and you continued to advertise the space in Nov and Dec yet had no renter physically in it, then those two months of vacancy ***DO*** ***COUNT*** for the number of days rented *PROVIDED* you did not use that space for your personal use for one single day while it was vacant.
b) Days of personal use - the answer to this one is *ZERO* unless you did "IN FACT" use that room or space for personal use during periods of vacancy "while the property was available for rent". What you used the room or space for before it was available for rent *does* *not* *count* for *anything*.
On the screen "let us calculate your expense deductions for you" select YES to let the program do the math for you. Then enter the percentage of your floorspace that was "exclusive to the renter". For example, if you live in a one bath house and rented out one bedroom to the renter, then only the square footage floor space of the bedroom was exclusive to the renter. The bathroom was not since it was shared with the renter by the property owner.
However, if you live in a 2 bath house and the 2nd bathroom is only accessible from the one bedroom that was rented out, then that 2nd bath is also exclusive to the renter. You will include the square footage of the bedroom and the bathroom in the total space that was exclusive to the renter.
Simply divide the square footage exclusive to the renter by the total square footage of the house and that will give you the percentage of floor space that was exclusive to the renter. After entering that percentage (out two decimal places if necessary), continue.
Yes, you are an active participant and continue.
No, you did not pay anyone $600 or more, and continue.
Elect to enter the rental info yourself, continue and work through to the "Review your [propertyname] Rental Summary" screen. Then enter every single penny of income paid to you by the tenant for any reason, for the entire year. Then press on.
In the expenses section, you will enter expenses paid *for* *the* *entire* *house*. So you will enter 100% of the insurance you paid, 100% of the utilities you paid, 100% of the property taxes you paid, 100% of the mortgage interset you paid, etc., etc., etc. When done working through the expenses you'll be returned to the summary menu. Take note that the total shown for the expenses you entered will *NOT* agree with the figures you entered. That number is based on percentage of total floor space that was rented (classified as business use), and the number of days rented (including vacant periods if it was available for rent.) and the number of days of personal use during the time it was classified as business (rental) use.
So if 20% of your floor space was available for rent for 182 days of the year (that's six months) and you did "NOT" have one single day of personal use of the space during those 182 days, the math works like this (I'm using imaginary numbers for easy math)
- Total paid for utilities, mortgage interest and property taxes for the *ENTIRE* 365 day year - $3,600
- Divide that by 365 days and you get roughly $9.86 per day.
- Multiply $9.86 by 182 (number of days rented/classified as business use) and you get $1,795.07
- Multiply $1,795.07 by .2 (percentage of floor space exclusive to the renter) and you get roughly $359.01
That $359.01 is what you're allowed to claim as a deductible rental expense on SCH E.
The remainder of the "allowed" deductible expenses will be automatically carried over to the SCH A by the program. But even then you'll note that the SCH E deductions and the amount carried over to the SCH A still don't total the total of the "whole house" expenses you entered.
That's because the "only" deductions allowed on the SCH A are for mortgage interest and property insurance. So the remaining 80% of your homeowner's insurance and utilities are not deductible anywhere on the tax return.
Finally, in the expenses section you'll enter the entire amount of the HOA fees you paid for the year on the screen where it asks for "miscellaneous expenses". It will be the very, very, very last screen in the expenses section.
Whew! Any questions?
