We rented our house for part of the year then resumed personal use. How do we deduct Mortgage Insurance? Under rental expenses or under our home deductions?

[amarchman22]

Rental period was from January to March.  Then we moved back upon the end of the lease and resumed personal use of the property.  Following the guide, we entered the Mortgage Insurance premiums from our 1098 under the rental expenses and under our home deductions, but it seems we are double dipping?

[JE10261457]

I rented out rooms in our home residence for three months.

In light of the comment, the recommended answer appears incomplete or incorrect.  TurboTax allocates based on the days of rental use.  If you allocate before entering in Turbo Tax, as suggested by the recommended answer, the program will allocate again based on the days of rental use thereby reducing the allowable expense. Please clarify.

Turbo Tax notes that you must divide expenses between the part of the property used for rental and personal purposes using a reasonable method, e.g. number or rooms or square footage.  I divided expenses using the number of rooms and the expense for the three month rental period.  For example, utility expenses vary from month to month.  Accordingly, I took the utility expenses for the rental months and allocated the expense based on the number of rooms.  When I entered the amount determined in this manner, TurboTax reduced the expense based on the days of rental use.  This seems incorrect since I allocated only three months of utility expense.  Please clarify.

I would appreciate a response from Turbo Tax.

[MargaretL · Accepted solution]

Please allocate the expenses. You may do so based on the number of months that the property was used for rental. If 3 months out the year the property was a rental, then 1/4 of the mortgage insurance, real estate tax and mortgage interest would be allocated to rental and entered as your rental expenses; enter the remaining portion under Deductions & Credits, Your Home. 

[ugur-ozyuruk]

I know how to do this allocation calculation. However, turbotax already asked me how many days I used the property for personal use and how many days for rental purposes which I provide this info. So, it makes me think that I should enter the full year real estate tax and mortgage insurance paid and expect the software does the allocation calculation since the software had asked me about the duration of my personal use of the property and the duration of rental use. Or it is not the case meaning that I should manually calculate how much of real estate tax payment should be entered in rental expense section?

[JE10261457]

I rented out rooms in our home residence for three months.

In light of ugur's comment, the recommended answer appears incomplete or incorrect.  TurboTax allocates based on the days of rental use.  If you allocate before entering in Turbo Tax, as suggested by the recommended answer, the program will allocate again based on the days of rental use thereby reducing the allowable expense. Can Turbo Tax clarify?

Turbo Tax notes that you must divide expenses between the part of the property used for rental and personal purposes using a reasonable method, e.g. number or rooms or square footage.  I divided expenses using the number of rooms and the expense for the three month rental period.  For example, utility expenses vary from month to month.  Accordingly, I took the utility expenses for the rental months and allocated the expense based on the number of rooms.  When I entered the amount determined in this manner, TurboTax reduced the expense based on the days of rental use.  This seems incorrect since I allocated only three months of utility expense.  Again, can TurboTax clarify?

[TaxGuyBill]

@Web1457    If you only enter the amount for 3 months, should should be a place to enter 'direct' expenses that apply to only the rental.

Just make sure you are manually prorating the amounts so that you enter ONLY enter the rental space percentage.  So if you rent out 30% of your home, only enter 30% of the expenses.  Then the program will take that number, and either apply it directly (as I mentioned above), or it will take your annual amount and prorate it between the rental day and non-rental days.