PROPERTY TAX DEDUCTION - EACH ONE IS BETTER?

[taxache]

I am homeowner who also rents rooms where I live. My property tax --real estate tax --is $18K almost twice the new  2018

$10k threshold. How do I itemize this to take full advantage of the deductions?

Do I break in two $10K personal deduction  maximum allowed under the new tax law + $8K remainder deducted as business expenses, I presume if allowed the $8k will prorated as I live in the property.

Or would be more advantageous prorate 60% % rented  of  the entire $18k?

Thank you

[TaxGuyBill · Accepted solution]

You don't have a choice in how to divide it.  It is divided based on rental versus personal use.

The program should walk you through everything, so hypothetically you should just enter $18,000 and let the program divide it.  However, there may be several ways of doing it, so you should manually know what the numbers are to verify the numbers on the tax return.

You start of calculating the space of your home that is used exclusively for rental.  Let's say that is 30%.  In that example, $5400 ($18,000 x 30%) is deductible as a rental expense on Schedule E.  The rest is allocated to personal use on Schedule A (subject to the $10,000 limitation).

Be aware that the limit is $10,000 for total personal taxes.  That includes any State or Local income taxes.