How to Report Schedule E Rental Income For a Portion of a Primary Residence

Schedule E  rental Income for a portion of a primary home

1. Click Add Form, then click SCH E PG 1 to add a Schedule E to the tax return.

2. Double click the SCH E COL form to use for this rental under PROFORMA FORMS on the Attached Forms list.

3. Enter the rental address and property type.

4. Enter the days rented at fair rental value for the portion of the home that was rented.

5. Enter the number of days with personal use for the portion of the home that was rented.

6. Check the Was this property a principal residence? check box

7. In the box, enter the percentage of the total home for the portion of the home that was rented.

8. Complete the questions on Line 2.

9. Enter the Rental income on Line 3 in the To Return column.

10. Enter the rental expenses for Lines 5 through 19 in the indirect or direct columns.

a. Rental expenses entered in the indirect column will be multiplied by the percent of tenant occupancy percentage. Expenses that apply to the entire home should be entered in the indirect column.

b. Rental expenses entered in the direct column are not multiplied by the percent of tenant occupancy percentage. Expenses that apply exclusively to the portion of main home rented should be entered in the direct column.

NOTE: Mortgage interest on Line 11 and taxes on Line 17 entered in the indirect column will carry the amount allocated to the rental to Schedule A as an adjustment that reduces the total entered on Schedule A.

11. To enter depreciation, click Add Form and then click the Depreciation Tab.

a. Double click the rental to enter depreciation for

b. Click New Asset and complete the "Asset Details." Then click OK.

c. Enter the Original Cost or Basis, the Salvage Value, and the Percent Business Use. The Percent Business Use should be the same percentage as entered on the SCH E COL form for the portion of the home.

d. Once the depreciation information has been entered, click Close.

12. The information on the SCH E COL form under Proforma Forms in the "To Return" column will carry to Schedule E PG 1.

13. If the taxpayer is itemizing deductions, the real estate tax and mortgage interest adjustments will calculate on Schedule A. The total amount of real estate taxes and mortgage interest should be entered on Schedule A and the portion used for Schedule E will be subtracted.