How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Merlo Your Own Question
Merlo
Merlo, Accountant
Category: Tax
Satisfied Customers: 9783
Experience:  25+ years tax consulting. Specializing in returns for US citizens living abroad
9573734
Type Your Tax Question Here...
Merlo is online now
A new question is answered every 9 seconds

My partner and I share a house. I am the homeowner, but he

This answer was rated:

My partner and I share a house. I am the homeowner, but he pays 1/2 of the mortgage and utilities. He has a small business he does out of the home and deducts the mortgage and utility payments to me as business expenses. Since he does that, I've been putting those payments on my tax returns as rental income. Is that what I've should be doing or, since this payment goes directly for housing expenses, do I really need to count it as rental income?

Hello greg,

 

There are a couple of issues here. The first thing is that if the money that your partner is paying to you is because he lives in the home, then he really should not be deducting those expenses as business expense. Even though he may be conducting his business from home, since he is not the homeowner, he is not allowed a business deduction for those payments. First of all, deductions for business use of home are limited to only the actual percentage of your home that is used for business. Just using a simple example, if you own a 5 room home and have one room that is dedicated as an office which you use for business, then you could claim 20% of certain home expenses as being business related, but you could not claim the entire amount of your expenses. When you rent property, which is basically what your partner is doing here since he is not the homeowner of record, the most he could deduct would be a percentage of what he pays you for rent and utilities, and he would have to be using one area in your home exclusively for business, or the deduction is not allowed.

 

As far as the money you are receiving from him from rental, you are correct in reporting this as income on your own tax return.

 

If this has been helpful please press the Accept button. Positive feedback is also appreciated.

 

Thank you.

Merlo and other Tax Specialists are ready to help you
Customer: replied 8 years ago.

Merlo;

 

I should have said that he only takes a percentage of the "rent" payment. He has 1 room dedicated as his office and has done all the calculations.

 

Thanks for the quick response! I appreciate the help

Thanks greg, and thanks for using JA
Merlo and other Tax Specialists are ready to help you

Related Tax Questions