Calculating expense deductions with a vacancy

[Dean28]

We have a 3 unit multifamily and live in one unit. One unit is rented and the other was vacant for all of 2021. The empty unit is having some repair work done. -Under “Let Us Calculate Expenses Deductions” (where rental use % is entered ). Do we indicate 1/3rd or 2/3rds? (Because two units are exclusively for rental.)  Or do we only indicate 1/3 because one unit was vacant in 2021? It’s confusing because of the instruction “Just enter the % of your property rented out.” or the tax year only?

[JulieS · Accepted solution]

It depends on why the property was vacant all year. 

If you withdrew the unit from the market for the entire year due to repairs or remodeling, enter one third. 

If you withdrew the property for a while in 2021 for repairs, but it was available and not rented for part of 2021, enter two thirds.

[deanofearl]

Thanks! That clarifies it!🤗

Follow up question: I understand that the fees, as well as points, are deductible for rental property over the term of the mortgage. I entered the mortgage interest and points in their own data specific fields. But I entered the fees and loan costs with the other depreciable assets.

I made two entries. "Processing Fees", which is the points processing fee. (Not the points itself) and "Services" which include all the rest: title ins. appraisal, credit etc.

I took 2/3 (.666) of the refi costs (points processing fee, appraisal, title fee etc.) and listed them under "amortizable intangibles", Code Section 163 over 30 years. The span of the mortgage.

Does that seem the right way to enter this info? TurboTax didn't flag anything, but I'd appreciate confirmation.

Thanks again-Dean