Mortgage Interest Limitation With Part-Year Rental Property

Forum|Forum|9 months ago
September 9, 2025
1 reply
8 views

TPs purchased a new house in February with a mortgage greater than $750K. They converted their old residence to a rental property and began renting on 4/1/24.

Per Pub 936 it appears that mortgage interest limitation needs to include the interest on the old residence since the TPs lived in the house more than 10% of the days rented. The lived in the old house for 54 days and rented the old house for 275 days.

What are the mechanics in PS to report the interest limitation for the old house? Do I simply report the principal and interest information in the limitation worksheet for January - March and then allocate the interest from April - December to the rental property?

ProSeries Professional

sjrcpa

Level 15

I have a different interpretation about old house. Its was principal residence until converted to rental. Interest incurred up to that date is home mortga5ge interest, subject to the usual rules ($750K/$1 million as applicable) The rest of the year's interest goes on the rental schedule.

Then apply the $750K limit to the new house/new mortgage.

I usually end up doing these calculations in a spreadsheet.

The more I know the more I don’t know.

D

david3Author

Level 7

Thanks for your help.

Yes, I knew to treat the interest during the rental period as rental property interest.

So PS doesn't handle the proration between the residence period and the rental period when using the interest limitation worksheet?

sjrcpa

Level 15

"So PS doesn't handle the proration between the residence period and the rental period when using the interest limitation worksheet?" I wouldn't think so. This is not a vacation home 280A situation.

BUT, I don't use ProSeries.

The more I know the more I don’t know.

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