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Old 03-23-2014, 01:35 AM
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Partial Rental of Primary Residence

I rented out my primary residence for 3 months during 2013 and lived in it the remaining months. I wanted to know how to allocate the mortgage interest, property taxes, utilities, and miscellaneous rental expenses in renting the place. Thanks!



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Old 03-23-2014, 09:08 AM
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Originally Posted by Mike A View Post
I rented out my primary residence for 3 months during 2013 and lived in it the remaining months. I wanted to know how to allocate the mortgage interest, property taxes, utilities, and miscellaneous rental expenses in renting the place. Thanks!
basically since you rented your home for more than 14 days during the year of 2013, you need to report the rental income on 1040; you need to determine your personal use percentage. Divide the number of days you personally use the rental property by the number of days your rent the property. as you rented it 90 days of the year and personally use the home 270 days of the year, the result is 75 percent personal use.Calculate your rental expenses. This includes costs such as maintenance, supplies, insurance, mortgage interest, taxes and utilities.you should allocate your expenses. For each expense category, multiply the expense by your personal use percentage as a decimal point. For example, if your rental utility expense for the year is $1,000 and your personal use is 75 percent, multiply $1,000 by .75. The result is $750. This is your personal use expense allocation.

Subtract your personal use allocation from the expense. The result is the expense you may claim on Internal Revenue Service Sch E, Use Sch E to report the full amount of your rental income and the allocated expenses. You must attach Sch E to your Form 1040 income tax return. The code requires you to allocate expenses other than interest, taxes, and casualty losses on the basis of the days the pty was used in 2013;to compute the rental portion of the exp,i.e., utilities/repairs and depre, you multiply the exp by the ratio of number of days rented at fair rental value o the number of days used during the year.so from your gross rental income, you must subtract 25% of mortgage int/real estae taxes, then 25% of the utilities, Depre until the expenses reach the total gross rental income;aslongas those rental exp exceeds deductible exp, then you need to c/f next year.. You can deduct 75% of real estate taxes/mortgage interest exp on Sch A of 1040 as personal expenses.



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Old 03-26-2014, 01:47 PM
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Hi, my question is regarding the same area. We rented out a room every weekend to my wife's cousin, however we didn't have them sign a lease or have any documentation. They also just paid us in cash. Any ways we can claim this and if so, what documentation is expected (bare minimum).



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Old 03-26-2014, 02:36 PM
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Originally Posted by hulio82 View Post
Hi, my question is regarding the same area. We rented out a room every weekend to my wife's cousin, however we didn't have them sign a lease or have any documentation. They also just paid us in cash. Any ways we can claim this and if so, what documentation is expected (bare minimum).
Same as above; yo need to rpeort the rental income in cash on Sch E and you need to determine your personal use percentage. Divide the number of days you personally use the room by the number of days your rent the room. as you rented it 52 (or 104 days 2*52 weeks)days of the year and personally use the home 314(261) days of the year, the result is 86(72) percent personal use.Calculate your rental expenses. This includes costs such as maintenance, supplies, insurance, mortgage interest, taxes and utilities.you should allocate your expenses. For each expense category, multiply the expense by your personal use percentage as a decimal point. For example, if your rental utility expense for the year is $1,000 and your personal use is 86(72) percent, multiply $1,000 by .86(72). The result is $860. This is your personal use expense allocation.
Subtract your personal use allocation from the expense. The result is the expense you may claim on IRS Sch E, Use Sch E to report the full amount of your rental income and the allocated expenses. You must attach Sch E to your Form 1040 income tax return. The code requires you to allocate expenses other than interest, taxes, and casualty losses on the basis of the days the pty was used in 2013;to compute the rental portion of the exp,i.e., utilities/repairs and depre, you multiply the exp by the ratio of number of days rented at fair rental value o the number of days used during the year.so from your gross rental income, you must subtract 14(28)% of mortgage int/real estae taxes, then 25% of the utilities, Depre until the expenses reach the total gross rental income;aslongas those rental exp exceeds deductible exp, then you need to c/f next year.. You can deduct 86(72)% of real estate taxes/mortgage interest exp on Sch A of 1040 as personal expenses.



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Old 03-27-2014, 08:49 AM
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Originally Posted by Wnhough View Post
Same as above; yo need to rpeort the rental income in cash on Sch E and you need to determine your personal use percentage. Divide the number of days you personally use the room by the number of days your rent the room. as you rented it 52 (or 104 days 2*52 weeks)days of the year and personally use the home 314(261) days of the year, the result is 86(72) percent personal use.Calculate your rental expenses. This includes costs such as maintenance, supplies, insurance, mortgage interest, taxes and utilities.you should allocate your expenses. For each expense category, multiply the expense by your personal use percentage as a decimal point. For example, if your rental utility expense for the year is $1,000 and your personal use is 86(72) percent, multiply $1,000 by .86(72). The result is $860. This is your personal use expense allocation.
Subtract your personal use allocation from the expense. The result is the expense you may claim on IRS Sch E, Use Sch E to report the full amount of your rental income and the allocated expenses. You must attach Sch E to your Form 1040 income tax return. The code requires you to allocate expenses other than interest, taxes, and casualty losses on the basis of the days the pty was used in 2013;to compute the rental portion of the exp,i.e., utilities/repairs and depre, you multiply the exp by the ratio of number of days rented at fair rental value o the number of days used during the year.so from your gross rental income, you must subtract 14(28)% of mortgage int/real estae taxes, then 25% of the utilities, Depre until the expenses reach the total gross rental income;aslongas those rental exp exceeds deductible exp, then you need to c/f next year.. You can deduct 86(72)% of real estate taxes/mortgage interest exp on Sch A of 1040 as personal expenses.
Thank you so much. I guess, my concern is that if the IRS ever came back and said prove it- how would i do so? we didn't have a contract or any way to track rent they paid. really it would be our word against theirs. I guess we could get my wife's cousin to vouch for it.



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Old 03-27-2014, 12:42 PM
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Originally Posted by hulio82 View Post


#1; I guess, my concern is that if the IRS ever came back and said prove it- how would i do so?



#2; we didn't have a contract or any way to track rent they paid. really it would be our word against theirs. I guess we could get my wife's cousin to vouch for it.
#1;that is also my concern; if it is personal check, you ned to make copies of each check you receive and deposit each check into a bank account; you need to show some evidence,i.e, cash receipts or amount deposited in yoru bank acct or etc. you need to prove your all cash income.it is tax fraud by not disclosing some of your income. it needs to be entered separately on tax forms. You, as taxpayer, must report all income from any source and any country unless it is explicitly exempt under the U.S. tax code.

#2;you need to keep careful records of your cash income. In the event that the IRS audits your cash income, it will look at bank account deposits, so make sure your calculated cash income is close to those deposits.aslongas you rent it out you need to report it on Sch Eand need to deduct other rent related expenses on the Sch E.



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