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    SpartyPants's Avatar
    SpartyPants Posts: 1, Reputation: 1
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    #1

    Jan 28, 2010, 08:11 AM
    Can I split mortgage interest between schedule A and schedule E?
    I am posted outside the US with the US government and therefore renting out my principal residence.
    On my 2009 return, if I deduct all the mortgage interest I paid on my house in schedule E (rental property), I won't have sufficient deductible expenses to itemize in Schedule A. If I can't itemize schedule A I will not be able to deduct state income taxes I paid to my state of residence (which I continued to pay while living overseas in order to qualify for in-state college tuition for our kids) or my charitable contributions.
    I'd like to know whether I can allocate some of the mortgage interest I paid to Schedule E and some to Schedule A, such that I can get over the itemizing threshold of Schedule A, and thus be able to deduct the state income taxes and charitable contributions I paid in 2009.
    The IRS web-site does not address this admittedly rare situation.
    Thanks very much.
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,818, Reputation: 846
    Senior Tax Expert
     
    #2

    Feb 16, 2010, 03:23 PM
    If the house was lived in part of the year and rented part of the year, THEN you por-rate the mortgage interest and real estate taxes between Schedule A and E.

    If you rented the house for the ENTIRE year of 2009, then the mortgage interest and real estate MUST be deducted on Schedule E, which is PREFERRED.

    SpartyPants, you GET the $11,400 standard deduction regardless of whether you itemize or not, so if your itemized deductions after putting your mortgage interest and real estate taxes on Schedule E is $11,000, you do NOT lose out on the charitable donations or local income tax deduction. You get it ANYWAY, and THEN some!

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