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?

Improve this question

1 Answer 1

Reset to default
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.

Improve this answer
7
  • 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, 2016 at 0:32
  • No you need to treat these almost as if they are two separate entities.
    – JTP - Apologise to Monica ♦
    Apr 18, 2016 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, 2016 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.
    – JTP - Apologise to Monica ♦
    Apr 18, 2016 at 2:06
  • @Aganju It's honestly pretty close to 50/50 anyway. Oh well...
    – CodeRedick
    Apr 18, 2016 at 3:24

You must log in to answer this question.

Not the answer you're looking for? Browse other questions tagged .