The property was never rented in 2021. The sale closed in March 2021. I am unsure where to enter the mortgage interest paid in 2021 from the 1098 form in Turbotax. Would this be classified as a selling expense I can use to reduce the basis of the rental property?
You'll need to sign in or create an account to connect with an expert.
Yes, if the mortgage ended at the time of the sale you should use the mortgage interest paid as rental expense. It is not part of the selling expenses. Likewise you should enter the real estate taxes from the settlement statement which would be your share for 2021 regardless of what you might have paid.
This answer assumes the property was available to rent until it was sold or you had a contract to sell.
Use the rental section to sell your assets from the rental activity. See the information below.
The selling price should be prorated for each asset then entered for each asset when you indicate they were sold or disposed of. You will not lose the remaining depreciation because you will use the remaining basis against the selling price to determine gain or loss.
To figure out the selling price for each asset:
Use the original cost of each asset listed on depreciation, add those together then divide each one by the combined total to find the percentage of the cost for each asset. Use that percentage times the sales price and sales expenses to find the selling price/sales expenses for each asset.
Example: Original Cost (of each asset on your depreciation schedule)
$10,000 Land = 13.33%
$50,000 House = 66.67%
$15,000 Improvements = 20%
$75,000 Total = 100%
Multiply each percentage times the sales price/sales expenses to arrive at each individual sales price/sales expense.
You need to dispose of the property by telling TurboTax how and when it was disposed of. Follow the instructions below.
You might also review information here.
Hi Diane,
Thanks so much for your response, however we spent the first two months of 2021 preparing the house for sale, so it was not available to rent. How would that affect how I treat the mortgage interest expense in TT?
If it was not available to rent, it was your second home until the time of sale. Include the mortgage interest and property taxes on your Schedule A.
Thanks!
From what I gathered, the mortgage interest paid while unrented could be considered a selling expense. I used TurboTax, and there's a section where you enter selling expenses to reduce the basis of the property. As for Mortgage Broker Lincoln, I didn't directly deal with that, but I'd recommend checking if they have any insights. They might have some experience or guidance on how to handle such situations. Would love to hear from others who've been through this or any seasoned pros who can confirm if I'm on the right track!
Selling expenses are costs used to prepare the house for sale. A mortgage payment would not likely qualify for that. It is a cost of ownership not directly related to the sale of the house.
Still have questions?
Make a postAsk questions and learn more about your taxes and finances.
Loudspeaker1999
Returning Member
Loudspeaker1999
Returning Member
snoblack
Level 2
Deondre17
New Member
Byzggjp
Level 1
Did the information on this page answer your question?
You have clicked a link to a site outside of the TurboTax Community. By clicking "Continue", you will leave the Community and be taken to that site instead.