1

I own a two-family house (duplex) and live on the first floor. Traditionally I've been reporting half the taxes and mortgage interest as expenses against the rental income, and the other half as my mortgage deduction.

This year I have plenty of expenses to deduct since I had to have some repairs made and took over utilities to rent the place out on AirBnB. The result of that is my interest and tax don't lower my tax bill any further.

On the other hand, I could list the Mortgage Interest and Property Taxes in the personal deduction section instead my tax bill goes down quite a bit. But is that actually allowed?

3

No. Utilities and repairs to your own home aren't a deduction. An upgrade, a major renovation, might be added to the cost basis.

For the rental half, are you saying the expenses are so large that they can't be deducted? In that case, they carry over to the next year. They shouldn't be lost.

  • Not sure how you read that, but the utilities are staying with the rental portion. I'm asking about moving the entire Property Tax and Mortgage Interest to personal deductions. And while it might carry over to next year, this year it's the difference between owing $1k and getting a small refund (I think.) – CodeRedick Apr 18 '16 at 0:32
  • No you need to treat these almost as if they are two separate entities. – JoeTaxpayer Apr 18 '16 at 0:46
  • Now if your 'half' is larger than the rented-out half, you could split it differently than 50/50 - for example, if the garden is completely not rented out (yours alone to use), and it makes 20% of the total, you are renting out 40% and you live in 40%+20%, so you could deduct 60% instead of 50%. What about the garage? Use your creativity (but stay within limits that are arguable if they check) – Aganju Apr 18 '16 at 1:34
  • 2
    @Aganju - It would have been easier to have that ratio at the beginning of the rental. I won't argue that the rental may really be 40% of the 'house'. But, I doubt having that ratio change year to year will pass the duck test. – JoeTaxpayer Apr 18 '16 at 2:06
  • @Aganju It's honestly pretty close to 50/50 anyway. Oh well... – CodeRedick Apr 18 '16 at 3:24

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.