Renting part of our residence: TurboTax seems to double-count expenses

[CBinNashville]

We rent out part (25%) of our primary residence. Unfortunately, the "Tax & Int" Worksheet on TurboTax Premier seems to include 100% of our real estate taxes and mortgage interest (in lines 2b and 5a) and add 75% of them in lines 2d and 5b, suggesting that we deduct 175% of these expenses. Assuming this is wrong, how can we fix this?

[Carl]

At this point it's obvious to me you entered data incorrectly, made incorrect selections, or possibly both. When dealing with renting out space in your primary residence you are asked for two types of expenses.

Whole House expenses

Rental Portion Only expenses.

While not rare, it is uncommon for you to have a figure more than $0 for any "rental portion only" expenses. So you need to work back through the SCH E section again and pay attention to details. Read the small print on each and every screen, because for your situation, the small print "does" matter, big time.

For mortgage interest, you'll enter it as a "whole house" expense. Then when you get to the "your home" section under the Deductions & Credits tab you will "NOT" enter it again. Read the small print and one of the screens will "tell you" the amount of mortgage interest already allocated to the SCH A for the "personal use" portion of the property.

Also, unless you started renting the room on Jan 1 of the tax year, the splits will "NOT" be 25%/75% for that tax year either.

Finally, PAY ATTENTION to the property taxes section on both the SCH E and the "YOUR HOME" section. Changes are that "you" may have to manually pro-rate between the two not only based on percentage of floor space rented out, but also for the period of time that space was classified as a rental during the tax year.

[CBinNashville]

So, I worked through this with a TurboTax Advantage expert.

To avoid overcounting, it's necessary to leave amounts for property taxes and mortgage interest blank in the deduction section, since these have already been entered in the Income part of TurboTax's EasyStep. And while I overlooked the note telling me to do so about property tax the first time through, there is no such built-in advice about mortgage interest.

The comment below about pro-rating the share of the house is relevant for folks who began or ended renting part of their house during the tax year, or who took personal days in their rental. Both cases are options in the income side of TurboTax.