Converted primary to rental. Can I tax deduct primary mortgage?

[Konkova Irina]

Hi Everyone,

Last year I've converted my primary residence into a rental on July 1st, 2021. 
Can I deduct the mortgage interest that accrued while it was my primary residence? i.e the first 6 months of the year? 
I don't have any other mortgage. 

Thank you, guys! This forum is very helpful.

[Ashish Acharya]

Yes 

[Konkova Irina]

Awesome, thank you!

[John Teachout]

By deduct, do you mean as an expense on the schedule E? If so, I think it would only be the interest for the time period after the property was converted to a rental. If you mean deducting it on your schedule A on your 1040, that would be the interest from the time you held it personally. Remember you also need to calculate your basis in the property at the time of conversion so it can be depreciated properly.

[Michael Plaks]

@Konkova Irina

You need to be a little more specific formulating your question.

First 6 months it was your residence. The interest for those 6 months is deductible as your personal interest, i.e. as an itemized deduction on Schedule A. Depending on your filing status and your overall financial situation, this interest may or may not create a difference for you. Maybe you end up with a standard deduction instead of Schedule A, we don't know.

The second 6 months it was a rental. That interest gets deducted on Schedule E against your rental income. There, it certainly does make a difference. Again, depending on your overall situation, the actual deduction may be unavailable in the current year, but in this case it is preserved as a future deduction.

[Konkova Irina]

Thanks, guys.

Yes, let me clarify the situation. 
It was my primary residence for the first six months, and if I do try to deduct it - Turbotax recommends me to itemize, otherwise, I am being recommended standard deduction. So it does make a difference.

What surprised me is on Form 1098 that I got from my mortgage lender, box 7 is unchecked, hence I was worried if I can deduct it. I assume it's unchecked because for the second part of the year I didn't live there, hence the property securing a mortgage is different from where the borrower lives. 

Again, thanks again, everyone. I would try to form my posts better next time :)

[Basit Siddiqi]

You will need to allocate the interest expense on Schedule A(itemized deduction) and Schedule E(Rental Property)