Two rentals one property in TX

[kwaller]

I have 2 rentals on same property, do I list these together or separately?. If i split them up do I split the taxes i paid up in half as well as any interest I pay and just list the repairs for each separately?

[PattiF]

While there is no rule against combining rental properties for Schedule E, you should enter each property separately for several reasons.

1. Rental activity may be different for each property. This includes number of days rented and income received.
2. Rental expenses may vary during the year, especially for repairs, maintenance, and supplies.
3. Depreciation may be different, depending on the cost of the rental property and/or the date it was placed in service.
4. Rental use may change for one property and not the other. Conversion to personal use, for example, or not renting one property for the entire year.
5. Also, if you sell one of the properties, you need to have separate records for the rental use.

For these reasons, and others, we recommend that you set up a separate Rental Property for each unit to report on Schedule E.

Split the shared expenses like interest and taxes and enter the other expense amounts for each property.

To enter your rental:

1. Open or continue your return, if you haven’t already
2. Locate the Search bar in the upper right of your screen. Search for rentals and select the Jump to link at the top of the search results
3. Answer Yes to the question Did you have any income from rentals or royalties?
4. On the next screen, What are you here to report?, select Rentals and Continue
   • If you have more than one rental property to report, no problem—just start with one, and we’ll come back to the other one(s) later
5. On the following screens, we'll ask you to enter all the info we need about your rental property, including: a description of the property, your rental income, any expenses and assets, and other less common situations about your rental
6. When you reach the Here’s your rental property info screen, double-check the info you entered to make sure everything is accurate and that you haven’t left anything out
7. Once you’ve entered all your info, you’ll be taken to the Your income screen
   • If you have more rentals to enter, scroll down to Rental Properties and Royalty Income (Sch E) and select Edit/Add next to this line
   • On the Your 2021 rentals and royalties summary screen, select Add another rental or royalty
   • From here, follow these instructions again, starting with Step 3, and repeat until you’ve entered all your rental income

[kwaller]

The property was bought as one, and can only be sold as one, however, it currently has two houses that we rent out, that is where i am not sure what to do. 

[AnnetteB6]

Follow the steps outlined by Tax Expert PattiF in the answer above to enter your property details on Schedule E Rental Income and Expenses.  

Even though you can only sell the property as one, you do have two houses that you can treat individually as separate rental properties.  This will give you the most flexibility and control over claiming your income and expenses for each property.  

The main thing that you need to remember is when you are entering information that is combined such as your property tax or mortgage interest, you should report half on each property if they are both similar in size.  If they are not similar to one another, prorate the amount accordingly.  Do the same thing when you are entering the cost of the property for depreciation.  Divide your total cost between the two houses according to their relative size.  

[Carl]

You can either treat as one, or split and treat each separately.

Overall, I would recommend you treat each one separately splitting things such as your property taxes, mortgage interest, insurance, etc. between the two. Can make things easier to deal with in the future. For example, what if for some unforeseen reason you need to move into one of them and make it your primary residence? What if one of them burns to the ground? Easy to deal with if each property is dealt with individually from the start. A real PITA otherwise.