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Barbara, Enrolled Agent
Category: Tax
Satisfied Customers: 2653
Experience:  18+ years of experience in tax preparation; 25+ years of experience as a real estate/corporate paralegal.
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If someone owns a 2-family home, and lives in one apartment

Customer Question

If someone owns a 2-family home, and lives in one apartment and rents out the second apartment, and rent for the second apartment includes utilities, what is deductible from rental income? How does one report this rental income and deductions on their tax return?
Submitted: 6 days ago.
Category: Tax
Expert:  Barbara replied 6 days ago.

Welcome to Just Answer. My name is ***** ***** I will be happy to assist you.

Any reasonable expenses used in the conduct, maintenance and managing of the rental property would be deductible. In your case, you would be able deduct 1/2 of the mortgage interest, real estate taxes, repairs, etc. because you live in one of the apartments. You will also take depreciation for 1/2 of the property.

The following IRS links contains excellent information:

Rental income and expenses are reported on Schedule E of your personal 1040.

Please let me know if I can assist you further.

Thank you and best regards,


Customer: replied 6 days ago.
Would the utilities included in the rent (water, gas, electric) be deductible from rental income? Cooking gas and electric are on separate meters. Heat and water are on one meter. If someone has to evict a tenant, are legal expenses deductible? Are repairs resulting from damage caused by tenant deductible?
Customer: replied 6 days ago.
I might request a telephone consult at a later time when the situation has resolved, but not right now.
Expert:  Barbara replied 6 days ago.

Any repairs to the rental apartment are deductible.

Expert:  Barbara replied 6 days ago.

Legal fees to evict a tenant are deductible.

Expert:  Barbara replied 6 days ago.

As to utilities, you must claim all rental income received regardless of what it was received for. You can then claim rental expenses that you paid, against that income.

Expert:  Barbara replied 6 days ago.

I will make you an offer for a telephone consultation. You can choose to accept it when you are ready.

Expert:  Barbara replied 4 days ago.

Just following up with you to see if you have any other questions. If so, please let me know, and I will be happy to assist you.

Best regards,