Complete How To Figure Your Gain or Loss Worksheet.If the business or rental space wasn’t within your living space, such as a first-floor store with residence, an apartment with its own entrance (and kitchen and bath), or a working farm with a farmhouse on the property, continue to Determine whether the business"hope that helps. 

The entrance door and staircase to the second story are both in the living room. 

The entrance is in the corner of the house and is a manhole style with ladder rungs going down about 10 feet and the actual shelter is about 100 sqft.

property is a duplex with a attic studio. now the attic studio has a separate entrance but no fire escape so that is a liability. however I will be house hacking and living in the attic and can't sue myself lol.The units seem extremely well kept from a first perspective a very well taken care of property it has off street parking and 3 parking slabs in the back. each unit is 2 bedroom 1 bath. avarage rent in the area I've seen 725 and 950 I've looked on centimeter and 800 850 is about avarage.

You should also check with your Attorney on what might have to be done to comply with ADA (Americans with Disability Act) to determine if you have to upgrade any of the entrances, bathrooms, etc.On your question on the water use, if you get records going back to when there was a daycare operating they may show the difference in average water use before and then after the daycare closed.-

cody, i would get written policy made up and hung placed publically all around entrances and exits, over due it at eye level, then email and mail same new bld policy to all units. legally must have signs posted up along with contract. as per my lawyer written signs are like public bld policy. then require in lolicy a fee. i charge $25 per butt and $55 hour cleaning fee. and then buy and   install activtek system from me to kill all smoke odors and hit them with fines for having use air scrubbers. keep sending them air and surface cleaning bills every 3 days.

What we have been doing since the beginning is at the entrance, we leave a snack tray and beside it, a piece of paper with that reads...."

While I do not know the local fire code in Baltimore, here If the building does not have a secondary exit for both units (regulations differ a little depending on whether either entrance/exit is shared vs independent), they would not be legal accommodations.

do you think it mite be easier building a small granny in law suite with a desperate entrance?

Have new and attractive signs installed at the entrances.