Provided that the total rental period doesn't exceed 14 days and the rent charged is reasonable, your business is able to deduct the rent payment on the business tax return and you won't have to report this as income on your personal taxes!

Without seeing the other deductions your family member has, it is hard to determine what split would be more advantageous. 

If the tax deduction for investment was limited that first year because of the amount I stayed then that's just what it is.

Bottom line: if your business made $20k after deductions, you cannot redirect all $20k into your 401k, you can redirect a smaller amount.I do not recommend the self-torture of trying to figure it out, but if you insist, go here and don't blame me: https://www.irs.gov/publicatio...This is not all.

If your spouse meets all three tests, having them qualify as a real estate professional makes your rental losses fully deductible on a jointly filed tax return. 1.

I thought that, at least I could deduct property taxes, Interest, PMI and Home owner's insurance.I am being told that, basically, we have to treat the entire rent check as taxable profit because of our income.

Deduct out the owner benefit, depreciation etc...

Can any part of the studio apartment be tax deductible?

Other than depreciation and standard deduction, not much else he could do.

Maybe even gave you a deduction against other income.