Solved: Where do i report earnings for a basement rental and how do I deduct a percentage of bills for that rental?
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New Member

Where do i report earnings for a basement rental and how do I deduct a percentage of bills for that rental?

It was rented for the entire year and it is 1/3 of our home.
1 Best answer

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Level 15

Where do i report earnings for a basement rental and how do I deduct a percentage of bills for that rental?

To report the rental of 1/3 of your home, you will: 

Go into your TurboTax return. Not sure you're in there? Click on the orange Take me to my return button.

  1. Search for rentals and then click the "Jump to" link in the search result.
  2. Answer Yes to the question Did you have any rental or royalty income and expenses?
  3. Follow the on-screen instructions as you proceed through the rental and royalties section.
    • We'll first ask you to enter general information about your rental (description, address, ownership percentage, etc.) 
    • Eventually, you'll come to the Rental Summary screen which is where you enter your:
      • Rental income
      • Rental expenses
      • Capital assets and depreciation
      • Vehicle expenses

Tip: Rent is considered income in the year you received it, not the year it applies to. This means that a rent payment for the month of January 2017 collected in December 2016 is reported on your 2016 return.

2nd Part of your question

For most bills you would allocate 1/3 of them to the rental. These would bills like utilities, property taxes, insurance, etc.  There may be some other bills where for example you had to repair or replace something in the rental unit and that would be allocated 100% to the rental.  An example may be the garage disposal in the rental had to be replaced, then 100% of this expense is rental related.  

View solution in original post

3 Replies
Level 15

Where do i report earnings for a basement rental and how do I deduct a percentage of bills for that rental?

To report the rental of 1/3 of your home, you will: 

Go into your TurboTax return. Not sure you're in there? Click on the orange Take me to my return button.

  1. Search for rentals and then click the "Jump to" link in the search result.
  2. Answer Yes to the question Did you have any rental or royalty income and expenses?
  3. Follow the on-screen instructions as you proceed through the rental and royalties section.
    • We'll first ask you to enter general information about your rental (description, address, ownership percentage, etc.) 
    • Eventually, you'll come to the Rental Summary screen which is where you enter your:
      • Rental income
      • Rental expenses
      • Capital assets and depreciation
      • Vehicle expenses

Tip: Rent is considered income in the year you received it, not the year it applies to. This means that a rent payment for the month of January 2017 collected in December 2016 is reported on your 2016 return.

2nd Part of your question

For most bills you would allocate 1/3 of them to the rental. These would bills like utilities, property taxes, insurance, etc.  There may be some other bills where for example you had to repair or replace something in the rental unit and that would be allocated 100% to the rental.  An example may be the garage disposal in the rental had to be replaced, then 100% of this expense is rental related.  

View solution in original post

New Member

Where do i report earnings for a basement rental and how do I deduct a percentage of bills for that rental?

I rent my basement also. I rented it for 10 months in 2019. 

 

I'm capped out on the SALT deduction, so moving proportionate interest expense and property taxes into a rental expense should increase my total deduction correct?

 

If that's the case, how do I enter this in turbotax? On my personal deductions i should put only 2/3rds of the mortgage interest and property taxes? This will mean i'm putting numbers in the personal section that don't tie to the 1098 from my lender.

 

Then put the remaining 1/3rd of the mtg int & property tax in as a rental expense?

 

That is how i currently have it entered but it doesn't make sense. My refund is much lower than it was before i entered my rental loss. 

 

Also, i followed the steps for putting in depreciation of the basement, within these steps TurboTax shows 2.5k of depreciation, but when i complete the steps 0 deduction shows up?

Expert Alumni

Where do i report earnings for a basement rental and how do I deduct a percentage of bills for that rental?

Rentals are considered passive activity. There are rules that govern how much losses can be deducted on your tax return. There are lots of reasons why some losses are not deductible. Check this resource for more information Solved: What is the limitations on rental house losses ... 

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