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

A Parents Guide to Claiming Children on Taxes

Learn how claiming children on your taxes will impact your federal tax return with advice from the tax experts at H&R Block.

Why do I owe taxes?

Are you wondering “Why do I owe taxes this year?” and are stumped for the answer? Let H&R Block’s experts explain why you may owe and what you can do about it.

Can You Deduct Child Support?

Can you deduct child support payments from your taxes? Learn more from the tax experts at H&R Block.

Where’s my refund – Hawaii?

Looking for more information about your Hawaii refund? Find out details on how to check your refund status, who to contact, and more from H&R Block.