We live in a duplex that we own and did a major remodeling project on the rental last year. Can I deduct all of the mortgage interest as a personal deduction?

[blee]

Normally we split the mortgage interest and property tax between a rental expense and personal deduction.  However this past year the unit was only rented for 6 months, and we did a major renovation to the unit the other 6 months.  This means that our rental income was lower than usual, and expenses were MUCH higher than usual.  Can I claim all of the mortgage interest and property tax as a personal deduction if I don't claim it against the rental?  Or do I still need to split 50/50?  Or can I split 75/25 since it was only rented out for 6 months?  (it is far more advantageous this year to claim as a personal deduction, but not sure that's allowed)

[JulieR · Accepted solution]

It depends. If the rental unit was not available to be rented during the period of remodeling, it would essentially be converted to "personal use" during the period of remodeling and the interest and taxes for the period of "personal use" could be allocated to Schedule A.

But, if the rental was held out as a rental during the time of remodeling, you would deduct expenses as you normally would except you could not take a loss for the period of time it was vacant.  See the following: https://ttlc.intuit.com/replies/6703636

Another consideration is that you may not even need to make the allocation because of the increased Standard Deduction unless the total of your Itemized Deductions are greater than the Standard Deduction.