First Year Rental - TurboTax Live - Automatic Prorating of Real Estate Taxes and Mortgage Interest

[GSP2025]

I am a first year landlord using Turbotax live/online.  I have found a lot of conflicting information regarding whether TurboTax automatically prorates certain figures in the Rental Property / Expenses/Assets (Depreciation) section of the live software.  Based on the questions asked when you setup the rental property specifics in the General Info / Situations section, it appears that TurboTax expects you to put in the full, total annual amounts for real estate taxes and mortgage interest listed on the related 1098.  This seems logical and the idea is supported when you attempt to enter the same 1098 in the Deductions & Credits section and the software rejects it by stating:

Rental property

Since your rental property is an investment, it gets entered as part of your income on Schedule E.

How do I get to my Schedule E?

However, when you enter the information in rental / schedule E section, it states,

Enter the rental portion of mortgage interest reported to you on Form 1098. We'll ask you to enter your personal portion later. Find This

In the schedule E (rental) section it makes it sound like you should prorate the information, but then in the Deductions and Credits section it doesn't allow you to enter the data.  My assumption is that the language is wrong and TurboTax does indeed prorate mortgage interest and realty taxes based on the specifics entered when you setup the rental property for the first year. 

Can someone please confirm the exact expenses (if any) that are automatically prorated in TurboTax Live?  Also, is there a way to view what exactly is being input on tax forms prior to submitting?  Thanks

[AmyC]

It depends. If you are renting part of your home, then expenses do have to be prorated between Sch E and Sch A.

First, in the general property information,  you must have marked "I rent out part of my home".

Second, select a method, enter percentages and numbers.  There are two options, either way you must know the percentage for the rented portion.  For my example, I will use 25% rental.

• You do the math:  Enter your %, example 75% of the mortgage interest and property taxes under federal deductions and credits for Sch A. Enter the other 25% on sch E for the rental.
• Let the program do the math:  Select that you rent part of your home, enter the percentage and select for the program to do the math. The program will put the correct 25% amounts on Sch E and pull the rest to Sch A.

You absolutely want to be viewing your forms as you  prepare the return. To print or view  your forms, including all worksheets:

• In desktop, switch to Forms Mode. 
• For online:
  1. On the left side, select  Tax Tools
  2. Select Print center
  3. Select Print, save or preview this year's return
  4. If you have not paid, select pay now.

[GSP2025]

Thanks Amy.  To clarify, I was not renting part of my home.  This was a rental that was previously my home and then converted to a rental property part way through the year.  Based on the screenshots it looks like the desktop version is more comprehensive, but there isn't an option to do the math yourself on the Live version as far as I can tell.  Does the live version default to automatically prorating real estate taxes and mortgage interest?

[DianeW777]

Yes, it will however I would recommend indicating it was rented all year and fair rental value (FRV) assuming your rent is close to the rent in your area for the same type of property. As indicated by our tax expert @AmyC, and I concur, you should do the math.

You will prorate the mortgage interest and real estate taxes, insurance based on personal use days and rental days in 2024. Any expenses after the rental activity began (placed in service date) would be rental expense. 

When you enter the asset for your rental property you will be asked the date placed in service. TurboTax will calculate the depreciation accurately for the time in service during 2024. In the screen image select converted from personal to rental, however as indicated you should respond to the questions above as instructed.  If you have land be sure to enter the full cost and then land in the space provided. Again, TurboTax will reduce the cost by the land before calculating the correct depreciation.

@GSP2025