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I live in an old 4 unit apartment house. I live in the

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I live in an...

I live in an old 4 unit apartment house. I live in the largest of the apartments (includes garages). Do I write off expenses by unit or by square feet? Example: One rental unit equals 1/4th the utilites, etc. or by percentage of square feet. Are garages included in the calculation? Is storage space calculated in? I have one attached and one detached.

Accountant's Assistant: The Expert will know how to help. Is there anything else the Expert should be aware of?

My unit is quite large with garages and storage spaces. I covers approximately 60% and the remaining 3 rental units cover approx. 40%.

Submitted: 10 months ago.Category: Tax
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9/27/2017
Tax Professional: Tax.appeal.168, Tax Accountant replied 10 months ago
Tax.appeal.168
Tax.appeal.168, Tax Accountant
Category: Tax
Satisfied Customers: 4,794
Experience: 3+ decades of varied tax industry exp. Tax Biz owner
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Hello. Thank you for choosing this Q&A service for assistance. My name is Angela. I will be assisting you.

Q1: Do I write off expenses by unit or by square feet?

A1: As all of the units are under the same roof, you would take the total square footage of the house and use the percentage of the square footage for each of the units to determine the percentage of expenses to apply to each unit.

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Q2: Are garages included in the calculation?

A2: The garage is not considered livable space when counting the square footage of your home, however, it is an improvement to the property.

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Q3: Is storage space calculated in?

A3: If it is not a livable space, the answer is no.

You can refer to the following article for additional information relating to this matter.

http://home.howstuffworks.com/home-improvement/remodeling/measure-square-footage3.htm

Let me know if you require additional information regarding this matter. If not, I ask that you be so kind as to scroll to the top of the page and select 3 or more stars to positively rate my response so that I can receive credit for assisting you. A 5 star rating is greatly appreciated.

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Tax Professional: Tax.appeal.168, Tax Accountant replied 10 months ago

Additional Information:

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You can use any reasonable method for dividing these expenses. It may be reasonable to divide the cost of some items (for example, water) based on the number of people using them. However, the two most common methods for dividing an expense are either based on the number of rooms in your home or based on the square footage of your home.

Example 1: Jane rents a room in her house to a college student. The room is 10 × 20 feet, or 200 square feet. Her entire house has 1,200 square feet of floor space. Thus, one-sixth, or 16.67% of her home is rented out. She can deduct as a rental expense one-sixth of any expense that must be divided between rental use and personal use.

Example 2: Instead of using the square footage of her house, Jane figures that her home has five rooms of about equal size, and she is renting out one of them. She determines that one-fifth, or 20%, of her home is being rented. She deducts 20% of her expenses that must be divided between rental and personal use.

Even though you have the options of dividing the expenses by 4, as you use a larger percentage of space, it would not be fair to determine the expenses this way.

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Tax Professional: Tax.appeal.168, Tax Accountant replied 10 months ago

REFERENCE SOURCE to last bit of info provided.

https://www.nolo.com/legal-encyclopedia/tax-issues-when-renting-out-room-your-house.html

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Customer reply replied 10 months ago
Thank you very much for your answer. It was very helpful. I'd use you again, Tom Hammerel
Tax Professional: Tax.appeal.168, Tax Accountant replied 10 months ago

Hello again. You are very welcome. Yes, feel free to request me by my username if you have other tax or finance related questions. Taxappeal168. Please remember to take the time to scroll to the top of the page to positively rate my response so that I can receive credit for assisting you. A 5 star rating is greatly appreciated. Thank you in advance.

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