Dear Tax Talk,
We stayed in our primary house until April 1. We moved to a new house and we have rented out our first house through a property manager. Can I claim mortgage interest, insurance, county taxes and other expenses on my tax return? Are there any restrictions since I have spent three months of this year in my first home?
-- Second Home

Dear Second Home,
Schedule E is used to report rental income and expenses. The form asks if you or your family have used the rental property for personal purposes more than the greater of 14 days, or 10 percent of the total days it is rented to others at fair value.

As you can guess, if you answer yes to this question you have issues. When you use a rental property in excess of these limits, your expenses are basically limited to income.

For purposes of determining if you used the property for personal purposes, you may not have to count days you used the property as your main home before or after renting it or offering it for rent as days of personal use. Do not count them as days of personal use if the following statements are true.

Not counted as personal use:

• You rented or tried to rent the property for 12 or more consecutive months. • You rented or tried to rent the property for a period of less than 12 consecutive months and the period ended because you sold the property.

This special rule does not apply when dividing expenses between rental and personal use.

Assuming you don't move back into the house before 12 months or if sooner before you sell it, you would use Schedule E to report the rental income and expenses since April 1. The mortgage interest and prorated taxes through April 1 would be itemized deductions. You would answer no to the Schedule E question on personal use.

To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. federal tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein. Taxpayers should seek professional advice based on their particular circumstances.

To ask a question on Tax Talk, go to the "Ask the Experts" page, and select "taxes" as the topic.