Case Study 2: Rental Expenses

Sergeant Paul Kingman lived in his home through September, when he was notified he was being transferred overseas. He rented his home out beginning in October. The total amount of Sergeant Kingman's mortgage interest for the tax year was $2,400 and his property taxes were $600.

How much of that amount should you enter on Sergeant Kingman's Schedule A and how much on Schedule E?

Click here for an explanation.

You should report nine months (January through September) of Sergeant Paul Kingman's mortgage interest and property taxes on Schedule A and the other three months (October through December) on Schedule E.

For his mortgage interest:

$2,400 divided by 12 months is $200 per month
9 x $200 is $1,800, entered on Schedule A
3 x $200 is $600, entered on line 12 of Schedule E

For his property taxes:

$600 divided by 12 months is $50 per month
9 x $50 is $450, entered on Schedule A
3 x $50 is $150, entered on line 16 of Schedule E

Schedules K-1 and Rental Income Workout

Rental Income and Expenses

Case Study 2: Rental Expenses