Renting out rooms in a home I live in?

Forum|Forum|3 years ago
April 7, 2023
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I purchased a house at the end of 2021 that I planned to have roommates in. It was just me in there until April and from that point on, I had 1-3 roommates each month paying rent. I paid all utilities. I have a formula to add up the utilities and divide them by the number of people so I think I am good there.

How do I deal with the mortgage interest and property taxes? Last year I had no renters and just did them as a homeowner as my interest and taxes are substantial.

Best answer by AnnetteB6

Perfect, one last question. I live in the house and started renting out the rooms in April of 2022. When I put that date of service in, it calculated depreciation and I now have a much larger refund, and a negative figure on the income of the rental.

I guess I'm not sure if that is right as I didn't think I could offset more than the income I received in rental as I live there as well.

Thanks for all the helpful replies.

As long as the depreciation is using the same percentage of business use (20% in your case), then it is only depreciating the rental portion of your home. Often when depreciation is taken into account, rental activities become an overall loss instead of a gain.

The fact that you also live in the house does not affect your ability to claim the loss if other qualifications have been met to claim the loss.

@Ripnlips1204

BrittanyS

You must split any expenses – mortgage interest, mortgage insurance premiums, and real estate taxes – between the rented portion of your home and the unrented part. You can also deduct expenses that are usually not deductible, like electricity and qualified home improvement projects.

To enter in TurboTax, follow these steps:

Under the rental property section, your Property Profile indicates that you rented out part of your home.
On the page, Let Us Calculate Your Expense Deductions for You, a yes answer will allow you to enter the entire mortgage expense, and TurboTax will do the math for you based on the rental % of your home.
If you choose this method, you wouldn't enter the deductible personal portion again. TurboTax would transfer the personal portion to Schedule A.

@Ripnlips1204

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Ripnlips1204Author

So in rough square foot the two bedrooms and bathroom are around 20% of the total square feet. So I put that in.

On the utilities front I want to divide it by the number of roommates as the amounts go up and down with a 3rd or 4th person. Can I report the expenses that way, as Turbotax is only giving me 20% of the number when I put it in.