How do I write off House Hacking Utilities?

[Colton Gingrass]

Hello BP, 

I am currently in the process of buying a 3 bedroom 2.5 bath house hack. It's two floors with the bedrooms upstairs and common areas downstairs (ie. kitchen, powder room, living room,etc..). The total house square footage is approximately 1700 square feet. 

I have read that there are two ways to deduct expenses while house hacking--The room method and the square footage method. Also it is my understanding that the common area is not deductible and only the rooms and areas "exclusively used" by the tenants are deductible. 

If I use the room method, they are using 2 of the three rooms upstairs (but the master is much bigger than both) which roughly occupy 50% of the upstairs including their bathroom. This would result in a 25% deduction. 

If I use the square footage method, the bedrooms only occupy approximately 14% of the upstairs resulting in a 14% deduction. 

My biggest question comes down to utilities. If I put the utilities in my name and split them evenly amongst the three of us, I have to count the portion they pay me as income. Lets say utilities are $300. So if I pay $100 and they pay $200, that $200 counts as income. Over the course of a year that is $2400. 

Using the room method, I can only deduct $600 of this. Using the square footage method, I can only deduct $336. And now I am paying tax on the remainder that is actually NOT income. 

Am I doing this calculation right? Is there something I am completely missing here? 

Thanks for any help from someone with some more advanced tax knowledge than I!