Part rental: Mortgage interest+Property tax distribution between 1040-Schedule-A and

[Josh Smith]

Title: Part rental: Mortgage interest+Property tax distribution between 1040-Schedule-A and Schedule E

I was doing a review of at my past tax returns which I have a tax firm file. For my part-owner-occupied-rental I see 2 different schemes being followed:

1) Mortgage interest+Property tax distribution between 1040-Schedule-A and Schedule E is as per the distribution of “Fair Rental days” vs “Personal use days” as mentioned in Schedule E. Say house was rented for 255 days and rest personal (70% house rented) then 70%:30% of property tax AND mortgage interest was allocated to Schedule E:Schedule A.

2) The “Fair Rental days” & “Personal use days” are blank in Schedule E and (say) 70%:30% of property tax was allocated to Schedule E:Schedule A but 30% :70% of mortgage interest was allocated to Schedule E:Schedule A.

Evidently Option #2 above is more tax advantageous (results in higher refund), but can it cause a problem with the tax man? I’ved used the same firm for years, but everytime it’s a different person.

Thanks!