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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 10830
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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I have a few roommates in my house where I live. Rather than

Customer Question

I have a few roommates in my house where I live. Rather than calculating spaces occupied by them, depreciating that much portion of the house, deducting associated utility usage cost, If I just figure. a taxable lumsum amount and report it as income to
IRS return, is that not acceptable to IRS? Or must I go thru all the rigmarole associated with generating spare space rental income and pay an accountant to do all that?
Submitted: 1 year ago.
Category: Tax
Expert:  Lane replied 1 year ago.

Hi,

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So sorry, the short answer is yes

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But, it really doesn't have to be that complicated.

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if you have four rooms that you rent, and lets say they're 10 x 10 each ... that's 100 square feet times 4 = 400 square feet

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then just take and divide by the total square footage of the house (bet you have that somewhere) to get a percentage

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and that's the percentage you use to allocate to rental expense

Expert:  Lane replied 1 year ago.

Here's the IRS guidance from Publication 527

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You rent a room in your house. The room is 12 × 15 feet, or 180 square feet. Your entire house has 1,800 square feet of floor space. You can deduct as a rental expense 10% of any expense that must be divided between rental use and personal use. If your heating bill for the year for the entire house was $600, $60 ($600 × .10) is a rental expense. The balance, $540, is a personal expense that you cannot deduct.

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Customer: replied 1 year ago.
In other words, a lumpsum reduction for utilities is a no no right? I must go thru space depreciation, prorations. maintenance expenses repair/servicing costs etc. on my return and there is no way to get out of it even out of this small income, isn't it?
Expert:  Lane replied 1 year ago.

Yes, so sorry ... one of the prices of being able TO allocate, and then apply depreciation and the other expenses to that %