How to enter Schedule E expenses for rental in TurboTax

[almasson]

I'm not sure how this form works in TurboTax and can't seem to find clear documentation to help me, so wondering if someone can help me through this.

Using one expense item as an example (amounts are rounded to make it easier to pose the question): using Real Estate tax as example of $10,000 with 25% of the expenses attributable to rental for me disabled mother to live with me. In the TurboTax form where expenses are entered, do I enter the total amount of $10,000 or do I enter $2,500 (the 25%)?  If I enter $10,000 where do I tell TT that the rental percentage is 25%?

This arrangement is not exactly the same as when I owned a 2-family home where one apartment was rented and upon the sale of the home, we had to pay Capital Gains tax. Is that something that I will face once I end this arrangement with my mother? I don't expect to rent to anyone else once she no longer is living in the home.

Thanks,

[ThomasM125]

You enter the $10,000. When you enter your rental Property Profile information in TurboTax, on the screen that says Do any of these situation apply to this property? one option will be I rent out part of my home. If you check that box, on another screen it will say Let us calculate your expense deductions for you. When you click on the "yes" box on that page, you will be prompted to enter the rental portion of the home as a percentage. Later, when you are prompted to enter your real estate tax, you should enter the full amount, and TurboTax will determine the correct amount to deduct based on the percentage you entered.  

While the house is being rented, you can deduct depreciation for the portion that is being rented. If you sell the house at a gain, the portion of the gain up to the amount of depreciation allowable when it was rented will be taxed as ordinary income, with a cap of 25%. This will be true whether you actually deduct the depreciation or not. Also, if you can exclude a portion of the gain on sale of the house because it was your primary residence, that will not extend to the portion of the gain equal to the accumulated depreciation allowable on the rental.

[almasson]

I did select "I rent out part of my home." My mom has lived with me as long as I have owned the home, but we never had a formal rental agreement, she simply contributed to the upkeep of the home. In December of 2024, she experienced a "life event," hospitalized and then was admitted to a rehab facility until March. She came home, but had to return to the hospital and again to another rehab facility. In May, she returned home and has been here ever since. On that screen it also asks whether the rental is new, I don't know if I should check this box as well.  I don't intend to rent out any portion of the home to anyone other than mom. The attorney recommended that we formalize the rental so as to aid in the effort to spend down her small account to qualify for Medicaid. The application was denied.

-- On the next screen it asks whether the property was rented for the entire year so the Yes box is checked.

--Then it asks whether the property was rented at FMV for the entire time, I suppose I need to answer Yes here as well (is that right?)

-- Next it asks how many days rented and how many days personal use. I'm uncertain as to what to do here as it was the entire year for both. What do I do here?

The house is 2035 square feet with the First Floor being 1334 sq ft and the upper floor (bedroom floor) is 701 sq ft. Mom has one bedroom but has been unable to get to the upper floor since her fall and was admitted to the hospital in 12/2024. She is restricted to the first floor (common areas) due her inability to climb stairs and spends most of the time in the family room where she has a recliner where she sits, sleeps etc. Allocating the space she occupies is confusing. Do have any suggestion?  I don't see where TT asks for the percentage unless it's on another screen.        

[AmyC]

Previously, your mom had a room and paid rent below fair market value so you could not claim the rental property. Now, you are charging full market value and able to claim the rental house. It is a new rental asset for you this year. Here are some key points:

1. Select yes to new rental.
2. Rented at Fair Market Value must be yes  rather than the family rate she had before. 
3. Rental days - your mom's bedroom was occupied with her belongings whether she was in rehab or at home. The room was rented all year.
4. Personal use days- zero. You were not using her bedroom or renting it out to others.
5. Square footage - this is the amount of space rented to your mother exclusively for her use, common areas do not count. If she has a private bed and bath, that would be the rental space. Usually, just a bedroom. Take the square footage rented exclusively for your mother and her things divided by the total sq ft of the home.
6. After you selected that you rent out part of your home and continue through the property profile section, a screen will ask "let us calculate your expense deductions for you" and you can choose to let the program do the math and you enter the rental use percentage or select no and you enter the correct rental portion for utilities, trash, mortgage, etc.