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February 3, 2024
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Primary residence vs rental allocation

  • February 3, 2024
  • 1 reply
  • 0 views

Hi,

 

I have a triplex that I live in, renting the first and second floor while living in the third. As a result Turbotax allocates a % to my personal income taxes and a percentage as an investment.

 

What is the most appropriate way to allocate primary vs rental?

 

Is it by number of bedrooms? Square footage? And how is a private unfinished basement for my own use counted?

 

    Best answer by Mike9241

    the right answer is whatever method would most properly allocate expenses which really isn't an answer

     

    Typically, you can divide the expenses for rental and personal use based on either:

    • The square footage of the rental space versus that of your entire house (e.g., 250 square foot room rented / 2,500 square foot house = 10% of expenses are deductible).
    • The number of rooms rented out versus the total number of rooms in your house (e.g., two rooms rented / 10 rooms in the house = 20% of expenses are deductible)

     

    • for the following type of expenses
    • Mortgage interest 
    • Repairs
    • Improvements
    • Homeowners insurance
    • House cleaning or gardening services(?) the IRS may deem landscaping gardening as 100% personal
    • Trash removal
    • Snow removal
    • Security system costs
    • Depreciation

    **************

    certain other expenses may be more properly allocated based on the number of people in the home

    like utilities

    ******

    in your situation with use of the basement that complicates matters. However, I think square feet, including the basement, is most appropriate. 

    *****************************

    others may have a different opinion

     

     

     

    1 reply

    Mike9241Answer
    February 3, 2024

    the right answer is whatever method would most properly allocate expenses which really isn't an answer

     

    Typically, you can divide the expenses for rental and personal use based on either:

    • The square footage of the rental space versus that of your entire house (e.g., 250 square foot room rented / 2,500 square foot house = 10% of expenses are deductible).
    • The number of rooms rented out versus the total number of rooms in your house (e.g., two rooms rented / 10 rooms in the house = 20% of expenses are deductible)

     

    • for the following type of expenses
    • Mortgage interest 
    • Repairs
    • Improvements
    • Homeowners insurance
    • House cleaning or gardening services(?) the IRS may deem landscaping gardening as 100% personal
    • Trash removal
    • Snow removal
    • Security system costs
    • Depreciation

    **************

    certain other expenses may be more properly allocated based on the number of people in the home

    like utilities

    ******

    in your situation with use of the basement that complicates matters. However, I think square feet, including the basement, is most appropriate. 

    *****************************

    others may have a different opinion