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Old 01-25-2013, 12:03 PM
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Join Date: Jan 2013
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Partial year rental property

I have searched through other forum threads on this issue but can't find anything to piece together for my situation.

We put our home to use as a rental property effective mid-June 2012. When claiming mortgage interest and property taxes, I don't know whether to split where I claim the deduction. In other words, I don't want to double dip but want to maximize the deduction. So here's what I see as options:

1) Claim all mortgage interest and property taxes under either homeowners deductions or rental property deductions. (This seems sketchy to me, though)
2) Split the deductions across the two deduction types/forms since the home was effectively a rental for 1/2 the year.
3) Claim the mortgage interest and property taxes under both areas. (This also seems sketchy since it would be effectively double-dipping).

Thoughts?

Thanks.



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Old 01-26-2013, 03:59 PM
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“1) Claim all mortgage interest and property taxes under either homeowners deductions or rental property deductions. (This seems sketchy to me, though)”========> As said above; if the residence is rented for fewer than 15 days during 2012, then the rental income is not taxable and the mort int and r/e taxes may be allowed on Sch A line 6 / 10. If the residence is rented for 15 days or more and is used for personal purposes for not more than 14 days or 10% of the days rented, whciever is greater, then the mort int and r/e taxes MUST be allocated between the personal/rental days. In this cae, the rental exp may exceed the rental income, and the resulting loss’d be deducted against other income, subject to passive loss rules. For example, assume that r/e taxes and mort int exp were $5700 and your personal use % is 50%, let’s make it easy, and the rental portion is also 50%, then for tax purposes, $2850 needs to be reported on Sch E as long as the rental income on Sch E exceeds at least $2,850.and the other $2850 need to be reported on Sch A on line 6/ 10.As I assume that your PAL exceeds r/e tax and mort expeses.
“2) Split the deductions across the two deduction types/forms since the home was effectively a rental for 1/2 the year.”=========>Corrrect; the exp must be allocated between perosnl,1/2 of 2012 and rental days, ½ of 2012.
“3) Claim the mortgage interest and property taxes under both areas. (This also seems sketchy since it would be effectively double-dipping).”=======>As said in the example, above, unless you rented it for fewertha125 days, you need to allocate r/e tax and mort int expenses on Sch E and Sch A;so UNLESS you itemize your deductions on Sch A on your return, you can’t deduct mort int and r/e taxes on your return.



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Old 05-23-2013, 12:47 AM
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Join Date: May 2013
Location: New York,USA
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For example, believe that r/e taxation and Mort int exp were $5700 and your individual use % is 50%, let us create it simple, and the lease section is also 50%, then for tax reasons, $2850 needs to be revealed on Sch E provided that the lease earnings on Sch E surpasses at least $2,850.and the other $2850 need to be revealed on Sch A on the internet 6/ 10.As I believe that your PAL surpasses r/e tax and Mort expenses.

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Last edited by Thomas Jacusy : 06-06-2013 at 06:52 AM.


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