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RobertT1
Level 2

When I calculate depreciation for my home because I'm renting out only a percentage, should that percentage be factored into the calculation as is the % of time rented?

I just did the depreciation section for my house because I'm renting out about 35% of the space (basement). I've also only rented it out for 75% of the year, and TurboTax factored that in e.g.: the 10K deprecation amount was reduced to 7500 for example.

However, I do not see a way to factor in the amount of space rented out without doing some math myself and playing around with other fields.

Should I even be doing this? Or what TurboTax is doing correct and the percentage of space rented not matter?
17 Replies
Mike9241
Level 6

When I calculate depreciation for my home because I'm renting out only a percentage, should that percentage be factored into the calculation as is the % of time rented?

either enter 35% of cost or enter full cost and enter business use as 35% on the same form that the property is entered.  (line 6)

 

if depreciation for a full year is 10K you don't get 75% because of the mid-month convention for rental property.

say rental started in april you will only get 8.5/12 of the $10K as the depreciation.  

 

Carl
Level 15

When I calculate depreciation for my home because I'm renting out only a percentage, should that percentage be factored into the calculation as is the % of time rented?

On the last screen where it asks:

Percentage of time I used this item in this business (e.g.;80%)

The question is wrong for *your* specific situation. The question should be:
Percentage of floor space used in this business

So change your entry in that box so it shows the percentage of floos space rented, and the depreciation figures will be correct then.

The program already knows the percentage of time, based on the date you told the program you placed it in service, on an earlier screen. But for this specific calculation, the program does not know the percentage of floor space. Yes, you entered that in an earlier screen. But the program used that entry for the sole purpose of figuring the amount of mortgage interest you could claim on the SCH E, and that was it.

RobertT1
Level 2

When I calculate depreciation for my home because I'm renting out only a percentage, should that percentage be factored into the calculation as is the % of time rented?

I understand; thank you.

RobertT1
Level 2

When I calculate depreciation for my home because I'm renting out only a percentage, should that percentage be factored into the calculation as is the % of time rented?

Carl. I ended up trying your suggestion and it worked. Note there is no place for me to specify the percentage of floor space used though.

ColeenD3
Employee Tax Expert

When I calculate depreciation for my home because I'm renting out only a percentage, should that percentage be factored into the calculation as is the % of time rented?

 

If you choose the vacation home/short term rental option, along with rent our part of my home, you will not get the screen that says, " Since you rented part of your home, would you like us to automatically divide house's expenses?"

 

You can select single family and still get the number of days rented question as well as the question above.

                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

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RobertT1
Level 2

When I calculate depreciation for my home because I'm renting out only a percentage, should that percentage be factored into the calculation as is the % of time rented?

Thank you for your message. I tried selecting this option:
First year rented / Part of home

under General info, along with this option:
Single family (part of home)

under Rental type and usage, but I never saw this question anywhere:
Since you rented part of your home, would you like us to automatically divide house's expenses?
I must be missing something! Thank you.
@ColeenD3 

ColeenD3
Employee Tax Expert

When I calculate depreciation for my home because I'm renting out only a percentage, should that percentage be factored into the calculation as is the % of time rented?

You may have a hard time returning to previous entries and have to delete the form and redo it. 

 

You'll want to see the screen, "Was house rented every single day in 2020?" and answer "no". the next screen asks about a home office. Then the third screen is the one you want.

 

 

 

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RobertT1
Level 2

When I calculate depreciation for my home because I'm renting out only a percentage, should that percentage be factored into the calculation as is the % of time rented?

Do I have to start from scratch with the entire return, or just with Rental Properties and Royalties (Sch E)?
I tried creating a new fake rental property but didn't see those options.

RobertT1
Level 2

When I calculate depreciation for my home because I'm renting out only a percentage, should that percentage be factored into the calculation as is the % of time rented?

I tried adding a new "test" rental property.

When I got to this question "Was house rented every single day in 2020?" I answer "no" and entered the days that it was rented. After that, I never saw a home office question, and this was the next thing I saw:

Let's get your rental info in the right place

Since you occasionally rent out part of Second Test and also use it personally, it's considered combined use.
Be sure to enter:
  • Expenses from the rented part as Rental Expenses.
  • Deductible expenses for the part that is never rented in Deductions and Credits.

and none of the questions/statements after that were for the home office or dividing expenses.

Carl
Level 15

When I calculate depreciation for my home because I'm renting out only a percentage, should that percentage be factored into the calculation as is the % of time rented?

I never saw a home office question,

A home office is not allowed for SCH E rental property, as rental income reported on SCH E is passive income anyway.

 

 

RobertT1
Level 2

When I calculate depreciation for my home because I'm renting out only a percentage, should that percentage be factored into the calculation as is the % of time rented?

Where does it need to be reported, under royalties?

Carl
Level 15

When I calculate depreciation for my home because I'm renting out only a percentage, should that percentage be factored into the calculation as is the % of time rented?

Where does it need to be reported, under royalties?

Report what? Not sure what you're talking about. But I will reiterate that a home office is flat out not allowed for rental property reported on SCH E. Period.

Rental income and royalty income are two physically different things, yet both get reported separately on SCH E.

 

 

RobertT1
Level 2

When I calculate depreciation for my home because I'm renting out only a percentage, should that percentage be factored into the calculation as is the % of time rented?

I mean how should the basement rental income be entered in order to get to the option where you can specify how much of the expenses are divided as seen in this image:

 

Edit:
The image I added isn't showing up. It was the image in the last post from ColeenD3

ColeenD3
Employee Tax Expert

When I calculate depreciation for my home because I'm renting out only a percentage, should that percentage be factored into the calculation as is the % of time rented?

Let's take this step by step.

1) Select Rental property-not royalty

2) Address

3) Single family

4) Rented part of your home

5) Rented every day NO. Add Fair Rental Days.

6) Lets get your rental info in the right place

7) Home office - I am assuming no.

😎 Since you rented part of your home, would you like us to automatically divide house's expenses?

 

 

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