Since I only rented for 3 1/2 months, my losses (after subtracting mortgage interest and property tax) will be huge. Of course, I'm not complaining since it's a tax deduction -- and at least I'm getting some rent now -- but I'm not sure if the mortgage interest and property taxes need to be prorated and declared in different sections of the tax forms or not. Do they?If I changed a condo from an investment to a rental in August 2008, can I still deduct mortgage interest?
Yes. You need to pro-rate the interest you paid for 3-1/2 months for use of the rental. It goes on Schedule E as a rental property. Don't forget to add depreciation expenses, legal fees, taxes, etc. related to the rental, and your rental income. The rest of the mortgage interest and taxes should go on your Schedule A deductions, subject to the $1M limit on debt.If I changed a condo from an investment to a rental in August 2008, can I still deduct mortgage interest?
yes--but check with your accountant for your state
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