First off, the note you were paying to the bank for your mobile home and land is a MORTGAGE not a Lien. renting out 1/3 of your home can be a rental shown on Sch E. Your cost basis is what the land and mobile home cost you. I'm not sure if you bought/rent the land under the mobile home. But at a minimum, the mobile home has a cost you paid to the bank. treating it as a partial rental will give you the ability to reduce the $700/month income by A PORTION of the water/sewer/gas/electric/property taxes/repairs, etc. Take the sf rented divived by the total sf of the mobile home. That will be the percentage to use.
