Rental

[monicac]

My client purchased 2 parcels of property together. They have separate addresses but they were sold together. The mortgage is an interest only loan for the full amount plus a cash out for construction to convert the garage into another unit. One of the parcels has two rental units, the other has 1 rental unit and the garage is being converted into a 2nd unit. The property manager gave them a report with the income and expenses together, not separated by each parcel.

They are currently refinancing the mortgage and separating it into two mortgages.

If I enter it together in 21, how will I separate it in 22? Or should I try to separate them now? 

[BobKamman]

Separate them from the start if there's a chance that the client will sell one and not the other.  If that's unlikely, just consider them a combined parcel as long as he owns them.  

[monicac]

He said he may sell them separately in the future.

 I agree it would be best to separate them from the beginning.
How would I go about separating them since there is only one mortgage?

[BobKamman · Accepted solution]

Use any reasonable method to allocate the full cost to each separate unit -- for example, square footage.  Then allocate the common expenses, like mortgage interest, according to the same percentages.