How to set up a loan for a multi-unit property (duplex)?

CRS

I need to track the interest for each unit separately for tax purposes but the mortgage is for both units (duplex).

NotACPA

Would the split of interest between the 2 units be equal?  Or what ratio?

And since the interest amount changes each month (as the principal owed changes), I think that you're in for a fair amount of manual updates.   Q can't automatically "split" the interest for you.

CRS

Yes it would be an even split (same sq footage for each unit). I guess I have two options 1) set one loan up and then just split the interest on taxes and then it won't tie nicely to the two separate properties or 2) pretend like it's two loans and then tie to each property, then when I make payments it would look like two payments. Other pros/cons?

NotACPA

Since downloading into a loan account is ill-advised (since that removes ALL ability that you'd otherwise have to manage the loan ... including the ability to view the account register), I'm partial to the "2 loans" concept.

You can use the Loan Wizard to set up the 2 loans.  The only downside that I foresee is that since it's really only 1 loan, with only 1 payment, you might run into difficulty when you download from your bank the 1 payment from your checking account.

And may I ask why you want to keep the interest separate?  Perhaps do you live in one unit and rent the other?

CRS

It's my understanding that each one needs a separate schedule E (they are separate single family homes on one lot- so the improvements/depreciation will be very different- one is currently tenant occupied and the other we are going to renovate before renting- so it will have a different cost basis and rent potential). Separate roof, heating, etc.