Tax Deductions for House Hacking?

[Shelby Pracht]

We rent out a portion of our primary residence on a nightly basis. Does that enable us to claim our own utilities, insurance, HOA dues and other expenses on our taxes? Or a portion of them?

[Joe Edgar]

This is becoming very common with airbnb, Homeaway and more.  The answer is yes, but only a portion of the expenses that go to the rental.  The catch is you are going to have to separate out many expenses and will lose some benefits when selling.  

I assume it is rented at least 14 days (or 10%) of the year.  It will be seen very similar to a vacation home that you rent out part time.

Taking expenses is great, but getting $500k in capital gains when you sell a primary residence is great as well.  If a portion is a rental then you can also depreciated it, but you will lose that same portion for capital gains exemption when you sell.

Here is a recent blog I did on other benefits for maximizing your rental this tax season.

Joe