Depreciation of rental property that i also live in

[dterroba]

I have a 2 unit rental property. I live in one unit and rent the other one. I calculated my cost basis of the property. For depreciation purposes do i divide that amount by 50%. Is this correct? Is this the same for the Loan Cost when I amortize them. 

Thanks for the help,

David 

[PaulaM · Accepted solution]

You can, but the easiest way is to enter your property as its own unit. When you set up the property under the profile section, enter 1/2 of the properties value for depreciation. Then the correct amount is taken for depreciation without having to adjust later.

For expenses, you would then just enter 1/2 of the shared amounts (insurance, property taxes, etc). If you add an asset later that is for the whole property (ex: roof), then enter in the asset section for 1/2 of the cost.

[dterroba]

So I am using TurboTax Home & Business CD. When setting up the property it asks me for the rental percentage. In this case it would be 50%. In the expense section it said to put the full amount (insurance, property tax, etc) and that turbotax would automatically split the cost by this %. But when setting up the cost basis for depreciation it told me "since you're only renting out a portion of this property you shouldn't enter the full amount of this asset. Instead you need to multiply the full amount of this asset, Instead you need to multiply the full amount of this asset by your rental percentage to find ou the cost you should enter for this asset." Just want to make sure. Thanks again

[PaulaM]

Yes, that is the correct because you indicated that you rented 'a part' of your home. It's really just a personal preference how to list the property in the beginning. Your steps as outlined in your comment above are 100% correct for the method you chose. 🙂