Question

I rent out an apartment in my house this qualify me to take rental property tax deductions on my return? Are there other tax deductions for rental property I qualify for?

Answer

If you rent the room for a profit, report the rental income you receive and expenses you pay on Schedule E. You will be eligible for rental property tax deductions for expenses you paid that are directly related to the rental unit.

Ex: You had to repair the floor in the rental unit. So, you can deduct the full amount of the repair expense on Schedule E, since it only applies to the rental unit.

For expenses related to the whole house, you must allocate the expenses. To find the deductible portion:

  1. Start with the square footage of the rental unit.
  2. Divide it by the square footage of the entire home.
  3. Multiply that percentage by the amount of your total expenses.
  4. The remaining amount is the portion you can deduct.

Typical allocable tax deductions for rental property may include the following:

  • Mortgage interest
  • Real estate taxes
  • Exterior painting
  • New roof
  • Utility bills for the whole house

Report the portion of the expenses allocated to rental use on Schedule E. You can’t deduct the portion allocated to personal use since they’re personal expenses. However, you can deduct mortgage interest and real estate tax payments. Report the portion of these expenses that are personal on Schedule A.

If you’re not renting property to make a profit, your deduction is limited. You can only deduct your rental expenses to the extent of rental income.

On Schedule A, you can deduct:

  • The mortgage interest and real estate taxes you paid on the property if the rental home is your first or second home
  • All of your other rental expenses as miscellaneous deductions

Related Topics

Related Resources

Filing for a Deceased Taxpayer

If you need help handling an estate, we're here to help. Learn how to file taxes for a deceased loved one with H&R Block.

Don’t Overlook the 5 Most Common Tax Deductions

From retirement account contributions to self-employment expenses, learn more about the five most common tax deductions with the experts at H&R Block.

New Baby, New House or New Spouse? How Major Life Changes Affect Your Taxes

Getting married? Having a baby? Buying a house? Go through your life events checklist and see how each can affect your tax return with the experts at H&R Block.

Spring Cleaning: Your Household Goods, Your Tax Deductions

Donating household goods to your favorite charity? Learn the ins and outs of deducting noncash charitable contributions on your taxes with the experts at H&R Block.