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Posted by nyakeengie on September 23, 2007, 7:45 pm
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I own my condo, and have a lodger renting one room. Last
year, I filled out Schedule E and put the rent in there. I
allocated my expenses (including mortgage interest) across
my Schedule A and Schedule E on a 70/30 basis, respectively
(70% being my use of the condo, and 30% being the tenant's
use).
This year, in looking over Publication 936, I happened to
notice the following:
RENTING OUT PART OF HOME
If you rent out part of a qualified home to another person
(tenant), you can treat the rented part as being used by you
for residential living only if all of the following
conditions apply.
-- The rented part of your home is used by the tenant
primarily for residential living. (True in my case)
-- The rented part of your home is not a self-contained
residential unit having separate sleeping, cooking, and
toilet facilities. (True in my case)
-- You do not rent (directly or by sublease) the same or
different parts of your home to more than two tenants at any
time during the tax year. If two persons (and dependents of
either) share the same sleeping quarters, they are treated
as one tenant. (True in my case)
______________________________________________________
Does this mean that I can report the full allowable personal
mortgage interest (i.e. Home Acquisition Debt + $100,000
Home Equity maximum) on my Schedule A, thus leaving all of
it (even the lodger's percentage- of-use allocation)
entirely out of my Schedule E?
If so, can I continue reporting the lodger's rent and 30% of
non- interest expenses (repairs, maintenance, HOA dues, etc)
on Schedule E?
The reason I ask is that I would like to "free up" line 12
of Schedule E for use in STRICTLY reporting mortgage
interest associated with mortgage funds which I recently
used to purchase a rental (investment) property. This is
advantageous because these funds exceed the deductibility
limits (Home Acquisition Debt + $100,00 Home Equity maximum)
allowed under Schedule A.
Trying to use line 12 on Schedule E for both the lodger's
portion of my mortgage interest and the rental (investment)
property's portion of my mortgage interest could get
confusing and messy (two recipes for an IRS audit, I
suspect). There are some "double-dipping" dangers I'd
rather not have to contend with in attempting to undertake
the necessary calculations. (In fact, I get a headache just
thinking about it! lol )
Thanks, guys! Hope the foregoing did not give you a
migraine. :-)
William
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