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If someone owns a 2-family home, and lives in one apartment

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and rents out the second...
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: 1 year ago.Category: Tax
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10/16/2016
Tax Professional: Barbara, Enrolled Agent replied 1 year ago
Barbara
Barbara, Enrolled Agent
Category: Tax
Satisfied Customers: 4,062
Experience: 20+ years of experience in tax preparation; 30+ years of experience as a real estate/corporate paralegal.
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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:

https://www.irs.gov/businesses/small-businesses-self-employed/tips-on-rental-real-estate-income-deductions-and-recordkeeping

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

https://www.irs.gov/pub/irs-pdf/f1040se.pdf

https://www.irs.gov/pub/irs-pdf/i1040se.pdf

Please let me know if I can assist you further.

Thank you and best regards,

Barb

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Customer reply replied 1 year 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 reply replied 1 year ago
I might request a telephone consult at a later time when the situation has resolved, but not right now.
Tax Professional: Barbara, Enrolled Agent replied 1 year ago

Any repairs to the rental apartment are deductible.

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Tax Professional: Barbara, Enrolled Agent replied 1 year ago

Legal fees to evict a tenant are deductible.

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Tax Professional: Barbara, Enrolled Agent replied 1 year 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.

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Tax Professional: Barbara, Enrolled Agent replied 1 year ago

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

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Tax Professional: Barbara, Enrolled Agent replied 1 year 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,

Barb

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Barbara
Barbara
Barbara, Enrolled Agent
Category: Tax
Satisfied Customers: 4,062
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Experience: 20+ years of experience in tax preparation; 30+ years of experience as a real estate/corporate paralegal.

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