House Hacking Tax Question

[Rebecca Shine]

Hi Everyone!

I purchased my first property 3 months ago, so there is a month and a half of home ownership expenses that will be included in my 2016 taxes.  This house is a duplex - I'm house hacking.  I know that I can write-off all expenses incurred for business purposes, and since it's a duplex, most of my research has said that I can write off 50% of expenses I pay towards the entire house.  For example, I pay for water for the entire house, through only one account, so I'd be able to write off 50% of that bill. Same goes for my home insurance.  However, the house is three floors, and my unit spans 2 of the 3 floors while my tenant's unit spans 1 floor.  My question is, do I deduct 50% of the water or home insurance bill because it's a duplex, or do I deduct only 1/3rd of the bills because my tenant's unit only spans one floor?  I'm not sure if that's something to take into consideration, or if I'm just over-thinking it.  Any advice is appreciated.

Thank you!

Becca

[Edmund Ricker]

@Rebecca Shine

You should deduct based on square footage of the home.  So figure out what % of the square footage you are living in vs. renting and deduct accordingly on Sch A for personal home expenses and schedule E for rental expenses.

Also, I would advise consulting a tax advisor in your area.  It will cost you a little money but they could save you much more in the long run.

Hope that helps.

Ed