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Old 03-25-2012, 04:22 PM
 
Location: Coastal Connecticut
10,684 posts, read 8,050,105 times
Reputation: 1995

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I'm using Turbo Tax this year to file my taxes.

I own a home and have put all the info in for insurance/tax deductions.

I also rent a room at $700/month.

Under business expenses it allows for rental income. I put all my rental income in there.

It also has a section where you can calculate your deductions for the rental income. Since my roommate and I split the utilities, I figure that's not really something I can deduct. However it does allow you to add mortgage interest and property taxes as a deduction. It calculates it depending on how much of the house you rent out. I put 6.7% as that's the square footage of the bedroom that he rents compared to the rest of the house.

However, if I put in those deductions, I think it can't figure out that's the same taxes for my house that I've already entered and gives me a calculation for a HUGE return. Something is clearly not right.

So, I guess I'm wondering - if I already deduct the interest/taxes from my income, I can't deduct it twice on the rental income, right?

Surprised that TurboTax didn't flag that if that's the case... Guess it isn't perfect.
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Old 03-25-2012, 04:49 PM
 
590 posts, read 1,069,111 times
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If you have rental property, you must divide the business expense and personal expense outside of Turbo Tax and enter the values as appropriate so they end up on Schedule A and Schedule E as appropriate. The utilities, property taxes, and mortgage interest, and depreciation of the rental are deductible. You can use the 6.7% ratio you determined as square footage to determine these values. Also determine the depreciation, because whether or not you deduct it now, you will have to recapture the amount of depreciation "allowed or allowable" (deducted or could have deducted) if you sell your home for a profit.
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Old 03-25-2012, 04:54 PM
 
Location: Coastal Connecticut
10,684 posts, read 8,050,105 times
Reputation: 1995
Good to know. I'm wondering if I should skip Turbo Tax this year and go with a professional. I'm not renting out anything in 2012 so I will just use Turbo Tax in 2013.
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Old 03-25-2012, 06:39 PM
 
590 posts, read 1,069,111 times
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Depreciation is not taken in the last year of rental, so it looks like you can skip those forms. You can use turbo Tax for 2011, you just have to divide up the property taxes and mortgage interest. For example, if your property taxes were $1,200 and you rented for 6 months, then $600 goes in Schedule A and $600 goes on Schedule E. The same goes for mortgage interest. For the portions that are deductible only if it is a business, you just have to calculate the cost and put it on schedule E. Turbo Tax should be able to handle that.
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Old 03-26-2012, 12:46 AM
 
Location: Coastal Connecticut
10,684 posts, read 8,050,105 times
Reputation: 1995
OK, I rented out the whole year.
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Old 03-26-2012, 12:52 AM
 
19,401 posts, read 11,563,828 times
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That seems like a lot of rent for one room. I rent an entire house with a full basement, double car garage, and 3 outside storage areas on the property for $600.00 monthly.
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Old 03-26-2012, 09:02 AM
 
Location: Coastal Connecticut
10,684 posts, read 8,050,105 times
Reputation: 1995
Quote:
Originally Posted by CSD610 View Post
That seems like a lot of rent for one room. I rent an entire house with a full basement, double car garage, and 3 outside storage areas on the property for $600.00 monthly.
Ha, this is southwest CT. A nice 3BR house in my town would be at least $2000 a month. You'd be lucky to get a nice studio for $1000.

While I know it's not entirely accurate, my Zillow rent zestimate is $2,236.
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Old 03-26-2012, 09:45 AM
 
2,357 posts, read 1,888,560 times
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Quote:
Originally Posted by Stylo View Post
Ha, this is southwest CT. A nice 3BR house in my town would be at least $2000 a month. You'd be lucky to get a nice studio for $1000.

While I know it's not entirely accurate, my Zillow rent zestimate is $2,236.
Yep. $700 for a room in SW Connecticut is not bad at all.
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Old 04-09-2012, 04:13 PM
 
Location: Coastal Connecticut
10,684 posts, read 8,050,105 times
Reputation: 1995
I may continue renting the room this year.

So, I put in all the proper info on TurboTax and something seems off. As soon as I put in when the room went in service (I started renting it 6/1/2010) there was a huge depreciation. See attached. It now shows a loss for that room I rent out??

Doesn't make sense.

Yes, my refund is bigger now but I don't want to get audited if this isn't correct.

See attached. Any ideas?
Attached Thumbnails
Quick tax question - renting a room-screen-shot-2012-04-09-5.09.57   Quick tax question - renting a room-screen-shot-2012-04-09-5.09.43   Quick tax question - renting a room-screen-shot-2012-04-09-5.06.10  
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Old 04-09-2012, 07:41 PM
 
590 posts, read 1,069,111 times
Reputation: 387
Depreciation is over 27.5 years on the portion of the structure used for renting. Land is never depreciable, because according to the IRS it does not wear out.

If your home cost you $1 million and half of that is the lot, and only 1/6 the house then you put down the value as $83,333. Turbo Tax should then calculate the depreciation to be around $1,441.

Without knowing the values you used for your house/room we cannot tell if you if it is correct or not.
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