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Updated about 7 years ago on . Most recent reply

Account Closed
  • Scottsdale, AZ
2
Votes |
8
Posts

Renting out Rooms in Primary Residence / Interest Deduction

Account Closed
  • Scottsdale, AZ
Posted

Hey guys--

I have a semi-complicated issue involving renting out rooms in my primary residence and how the mortgage interest / property tax deduction can be applied.

I own and live in my house and also rent 2 rooms.

Here are the financials for 2017 (numbers are not exact):

Total Rental Income = $10,000

Total Expenses, Depreciation, etc. NOT including mortgage interest / property tax = $12,000

Mortgage interest = $8,000

Property tax = $2,000

Total Deductions = $12,000 + $8,000 + $2,000 = $22,000

So you can see that the $12,000 alone is sufficient to nullify the rental income.

The question then:

Can I reflect the full $8,000 mortgage interest and $2,000 property tax on Schedule A, as I would on a normal primary residence that I was not renting out?

OR

Am I forced to allocate the expenses according to the proportion of the house that is rented vs. the proportion I live in?  So then 2/3 goes to Schedule E and is wasted, and only 1/3 goes to Schedule A.

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