ljwalters Posted February 13, 2012 Report Share Posted February 13, 2012 Client took in a boarder to help make his house payment. It is a family, husband, wife, and baby. rent received is $1000 per month. Renters have total access of house except for master bedroom and bath. owner does not use the other bathroom. Client does live in the house also and the kitchen is shared. How do I do the Sch E. Do I take half of expenses and half of the allowable depriciation. Can he go into a loss. The rent does not cover half of the mortgage interest only paymen. Linda Quote Link to comment Share on other sites More sharing options...
Pacun Posted February 14, 2012 Report Share Posted February 14, 2012 I think you are leaving crucial information but based on what I understand, I think you can use 50% of the mortgage interest on Sch E and the other 50% on schedule A. Same is true for taxes. You should use 50% of the house insurance cost on Schedule E but nothing on Sch A, same is true for depreciation. Keep in mind that depreciation doesn't include land. For the utilities, you can also deduct the percentage of the rental on Sch E. For repairs ONLY affecting the rented portion, you deduct it 100% on Sch E. For expenses that are 100% on the personal use, nothing is deducted. "Can he go into a loss"? If he is the one collecting the rent and showing the room when vacant and doing other rental activities himself, yes (he could have a loss up to $25K). Can you modify the tile without affecting what you stated on the boby of your post? Can you take out the "ROOMMATE" word and nothing gets lost? Quote Link to comment Share on other sites More sharing options...
jainen Posted February 14, 2012 Report Share Posted February 14, 2012 >>Do I take half of expenses and half of the allowable depriciation<< There are several issues here. First, if there is no possible way this arrangement could generate a profit it might be considered a not-for-profit activity in which tax deductions for expenses can not exceed income. If it is truly market rate, it is still a "dwelling unit used as a home" subject to Section 280A income limitations, i.e., utilities and other operating expenses can not create a tax loss. In any case, expenses are limited to the percentage used exclusively by the tenants, any shared space must be treated as non-business use. Quote Link to comment Share on other sites More sharing options...
joanmcq Posted February 14, 2012 Report Share Posted February 14, 2012 Ditto on what jainen said. FWIW, I do rent a room and do take the miniscule portion of insurance, taxes, etc that pertains to the rented bedroom. From what I've read concerning B&Bs, you can only attribute the bedroom and other bathroom to the rental. Any shared space, and this includes having to walk through that room to get to the kitchen, is personal use. No deductions attributable to personal use. Quote Link to comment Share on other sites More sharing options...
SCL Posted February 18, 2012 Report Share Posted February 18, 2012 jainen and joanmcq...thank you for your attention to this board...iloveyou! Quote Link to comment Share on other sites More sharing options...
ljwalters Posted February 23, 2012 Author Report Share Posted February 23, 2012 Been out of the office because of an emergency. So what I am understanding is: 1. there is no deduction for utilities. 2. only depriciation on the 2 bedrooms and the one bathroom. (can't get to the kitchen or the master bedroom without walking thru). 3 NOT 50%. Thanks Linda Quote Link to comment Share on other sites More sharing options...
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