How to File Schedule E for Home Used as Primary Residence Part of Year Then Rented

So I've got this property that was my primary residence from January through March, but I rented it out for the rest of the year. I tracked everything carefully and ended up with exactly 270 fair rental days and 95 personal use days, which works out to be 74% rental use for the year. When I'm filling out my Schedule E, I'm getting confused about how to handle the expenses. Should I be entering them as both rented and personal use, or should I just list them as rental only since that's the majority use? The tax software is asking me to categorize everything and I don't want to mess this up. Thanks to anyone who can help me figure this out!

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18 comments

Logan Stewart

•8M

You'll need to allocate your expenses based on the different uses of the property. Since you used it as your primary residence for part of the year and then as a rental, you'll need to divide the expenses accordingly on your Schedule E. For the time it was your primary residence (Jan-Mar), those expenses are generally personal and not deductible on Schedule E. For the rental period (rest of the year), you can deduct those expenses on Schedule E based on the percentage of time it was used as a rental (your 74% calculation). Some expenses like mortgage interest and property taxes might still be deductible on Schedule A for the personal use portion. Maintenance, utilities, insurance, etc. would be allocated based on the time percentages. The key is to only put the rental portion of expenses on Schedule E, not the full amount for the entire year.

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Logan Stewart

•8M

For depreciation, you can only begin taking it once the property is placed in service as a rental. So you'd start depreciation from when you converted it from personal to rental use, not from January. Your basis for depreciation would be the lower of the fair market value at the time of conversion or your adjusted basis in the property. For those transition expenses that occurred while moving out but before renting, those are generally considered personal expenses if they're related to your personal use, not rental preparation. However, if you incurred costs specifically to prepare the property for rental (repairs, cleaning, advertisements, etc.), those can be considered rental expenses even before the first tenant moves in.

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Sean Matthews

•8M

I went through this exact situation last year with my condo. I tried figuring it out myself but kept getting conflicting advice online. I finally used https://taxr.ai to upload my property documents and it identified exactly how to split everything properly on Schedule E. It analyzed my situation and gave me a detailed breakdown of what percentage of each expense could go on Schedule E vs what needed to be on Schedule A. The most helpful part was that it showed me which expenses could be fully deducted as rental expenses (like the repairs I made after converting to rental) versus which ones had to be split based on time allocation. It even calculated my depreciation starting from the rental conversion date rather than the beginning of the year, which saved me from making a costly mistake.

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Sean Matthews

•8M

For capital improvements made while it was a primary residence, the service properly factors those into your basis for depreciation. It helps you separate what's considered part of your adjusted basis from regular repairs. In your case, that kitchen upgrade would be added to your property's basis and then depreciated starting from when you converted to rental use. These mixed-use situations are actually where the service really shines. It doesn't just apply generic rules - it asks detailed questions about your specific property and usage patterns, then applies the appropriate allocation methods. It even helped me identify several deductions specific to my situation that I would have missed completely.

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Zadie Patel

•8M

I was really skeptical about trying another tax tool but I gave taxr.ai a shot after seeing recommendations here. Honestly, it was amazing for my rental situation. I had a property that started as my home then became a rental midyear similar to yours. The system correctly identified that I needed to allocate my mortgage interest partly to Schedule A (for personal use) and partly to Schedule E (rental use). It even pointed out that I needed to use a different calculation method for some utilities because I had a special situation with a solar panel system. Ended up saving about $2,100 in deductions I would have missed. Definitely worth trying if you're stuck on the Schedule E allocation issues.

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A Man D Mortal

•8M

If you're struggling with IRS questions about rental properties, I found an amazing service called Claimyr. I was having the worst time trying to get answers from the IRS about a similar primary-to-rental conversion, and kept getting disconnected after waiting for hours. I used https://claimyr.com and they got me connected with an actual IRS agent within 45 minutes. They have a nice video explaining how it works here: https://youtu.be/_kiP6q8DX5c. The IRS agent I spoke with walked me through exactly how to allocate expenses on Schedule E for a property that changed use mid-year. It was such a relief to get official answers directly from the IRS instead of guessing or relying on conflicting online advice.

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A Man D Mortal

•8M

It works because they use an automated system that navigates the IRS phone tree and waits on hold for you. They call you back once they've reached an agent. It's basically a sophisticated hold system that keeps trying different times and approaches until they get through. They definitely don't just charge you to sit on hold. I was skeptical too, but the service actually monitors the hold situation and uses algorithms to predict the best times to call. It saved me literally hours of frustration. When they connect you, you're talking directly to an actual IRS agent - the service just handles the nightmare of getting through their phone system.

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Emma Morales

•8M

I take back what I said. I was so frustrated after spending 3 days trying to get IRS clarification on my rental property calculation that I finally tried Claimyr. I was 100% sure it wouldn't work and was ready to demand a refund. To my complete shock, I got a call back in about an hour saying they had an IRS agent on the line! The agent explained exactly how to allocate my expenses for my converted property. She even told me about a special form I needed to file because my property was in a designated disaster area for part of the year, which I had no idea about. Honestly, I don't know how they do it, but it actually works. Saved me from potentially making a big mistake on my Schedule E.

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Katherine Hunter

•8M

Just a quick tip from someone who's been a landlord for years - don't forget to track those transitional expenses separately! When I converted my primary home to a rental, I made sure to document all the repairs and improvements made specifically to prepare it for rental use. Things like painting, deep cleaning, minor repairs, and advertising costs can all be deducted as rental expenses even if they occurred before your first tenant moved in. Just make sure you have good documentation showing these were rental preparation expenses.

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Katherine Hunter

•8M

Absolutely! Utilities during vacant periods between tenants are fully deductible as rental expenses. The property is still considered "in service" as a rental during those periods even when it's temporarily vacant. The IRS recognizes that vacancies are a normal part of rental business. The key is that the property must be available for rent and you must be actively trying to rent it during those periods. Keep documentation of your rental advertising or communications with potential tenants during those vacancy periods just in case.

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