 So your share of interest in taxes and your share of interest in taxes is the amount the corporation elected to allocate to you if it be reasonable, if it be reasonably reflects those expenses for your apartment. Otherwise, figure your share in the following manner. So now you've got the interest in taxes that the corporative itself might do a reasonable allocation to try to allocate the interest in taxes because now the corporation itself, as the corporative like as a separate legal entity is going to be dealing with paying the interest in taxes for everything, right? And you get but you should be able to be deducting the part of the interest that's applicable to you and the taxes if you're renting your place in the corporative. So now the question is, well, how do you figure out your portion? Well, maybe the corporative itself will do that with some reasonable method. If they do not, then you got to calculate that one divide the number of of your shares of stock by the total number of shares outstanding. That gives us your percent interest in essence, including any shares held by the corporation to multiply the corporation's deductible interest by the number you figured in one. This is your share of the interest. So fairly straightforward calculation, not too bad. Three, multiply the corporation's deductible taxes by the number you figured in one. This is your share of taxes. All right, next situation we've got property that's changed to rental use. So possibly it was personal in use and then we changed it to rental use. So the so the issue there often becomes around the basis or the cost of the property because you bought it some time ago. When you bought it, you bought it at fair market value. But now when you when you changed it to rental use, then the fair market value could have changed, for example. And you got to deal with that depreciation situation again. So if you change your home or other property or part of it to rental use at any time other than the beginning of your tax year, you must divide yearly expenses such as taxes and insurance between rental use and personal use. So now you've got this mid year kind of problem because you changed from from personal to rental in the middle of the year. So you can deduct as rental expenses only the part of the expenses that is for the part of the year the property was used or held for rental purposes. You can't deduct depreciation or insurance for the part of the year the property was held for personal use. However, you can include the home mortgage interest real estate tax expenses for the part of the year the property was held for personal use when figuring the amount you can deduct on schedule a example. So your tax year is the calendar year. You moved from your home in May and started renting it out on June 1st. You can deduct as rental expenses seven 12th of your yearly expenses such as taxes and insurance which makes sense because that's seven 12th is the ratio of seven over 12 months right the year that you rented it. Starting with June you can deduct as rental expenses the amounts you pay for items generally build monthly such as utilities when figuring depreciation treat the property as placed in service on June 1st. So now that's when that would be like if we bought the property and placed it in service or something like that similar situation because that's when we put it into the rental side of things from personal side of things. Now we have the basis issue so it's like okay so now I know when to put it on the books what am I going to put it on the books for because I didn't just buy it. Basis of property changed to rental use when you change your property you held for personal use to rental use for example you rent your former home the basis for the depreciation will be the lesser of the fair market value or adjusted basis on the date of conversion. Now this makes sense if you think about it because let's say you bought the property a long time ago for a hundred thousand dollars and now it's going up to a hundred and fifty thousand dollars and you're converting it from personal property to rental property. If you were able to just put it on the books at a hundred and fifty thousand the higher fair market value you would have gotten what we call a step up in basis which is a good thing usually you would like to be able to do that but notice what happens now is is you didn't realize the gain of the fifty thousand so usually if you if you sold the home for a hundred and fifty thousand and you cost a hundred thousand you'd have a fifty thousand dollar gain that might be exempted in that case if it was your personal residence but you have that gain situation and so you can't just wipe out the gain by saying well now I'm going to put it on the books at a hundred and fifty thousand and be able to depreciate and get a hundred and fifty thousand worth of depreciation or if I sell the rental property I've got this stepped up basis so so the higher basis is usually good we want to have a higher basis and the iris is you know going to be skeptical to step up the basis so so that would kind of make sense okay fair market value FMV this is the price at which the property would change hands between a willing buyer and a willing seller neither having to buy or sell and both having reasonable knowledge of all the relevant facts now this is a great idea in concept that we use all the time in practice it's quite difficult it's impossible to know because all property is unique this is real estate this isn't stocks that are the same so we can't really we don't know what that is that's the problem so if you so if you allow fair market value to to be adjusted all the time you end up with with act with with people making appraisals and stuff that are too high or too low depending on what they're trying to do so we have to use this in concept this idea of fair market value but it's not the easiest thing to come to when you're talking about real estate which is all unique so sale of similar property on or about the same date may be helpful to figuring the fair market value of the property figuring the basis the basis for depreciation is the lesser of the fair market value of the property on the date you changed it to rental use or your adjusted basis on the date of the change that is your original cost or other basis of the property plus the cost of permanent additions or improvements since you acquire it minus deductions for any casualty or theft losses claimed on earlier years income tax returns and other decreases to debt so notice that thinking about the basis of personal property like a home can be a little bit complex because unlike with rental property we don't have to track the basis of the home as closely oftentimes it'd be good to do though it because when we sell our personal home we might be subject to a gain and we have to deal with that at point in time but with rental property obviously we depreciate the property so we track it pretty closely with a personal home then you've got to make sure that you're you get the whole basis in there right so the basis you would think would be once again the cost or basis of the property what you bought the property for plus the cost of permanent additions or improvements big big things that you improved a new roof and that kind of stuff minus deductions for any casualty or theft losses claimed on earlier years income tax return so if you had a loss that you claimed because it went down in value or something like that which is less usual to happen and other decreases to the basis so for increase and decreases to basis you can see adjusted basis in chapter two example you originally built a house for $140,000 on a lot that cost $14,000 which you used as your home for many years before changing the property to rental use this year you added $28,000 of permanent improvements to the house and claimed a $3,500 casualty loss deduction for the damage to the house so part of the improvements qualifies for a $500 residential energy credit which you claimed on a prior year tax return because land isn't depreciable you can only deduct the cost of the house when when figuring the basis for depreciation so the adjusted basis for the house at the time of the change in its use was 164,000 so we're talking about the house here so 140,000 you built a house for 140 on a lot that cost 14,000 the lot the land isn't depreciable so we're talking about the building here so we're not adding the 14,000 as a depreciable component before changing the property to rental use you added 28,000 so 28,000 increase because you had permanent improvements to the house and claimed a $3,500 casualty loss so because we got a benefit from the casualty loss we're subtracting the benefit decreasing the basis part of the improvements qualified for a $500 residential energy credit so we're subtracting out the credit okay on the date of the change in use your property had a fair market value of 168,000 of which 21,000 was for land and 147,000 was for the house