1, for utility expenses, can i split based on number of people by 1/2?
Yes. You can deduct utilities based on percentage of floor space, or percentage of resident occupants that pay rent for that space.
2, for property tax, insurance, HOA, can i split by number of people, thus 1/2?
Same as above.
3, then for depreciation, can i change to square foot method, thus deduct 10% only to prevent tax recapture raise up bracket when sell?
I recall this being asked before, and at the time I "looked it up". If I recall correctly, for depreciation you don't get a choice. Your depreciation percentage is based on the square footage of the living space that is exclusive to the renter. An equal percentage of the land is allocated for that also.
One thing you want to check outside of taxes, is the property insurance. Typically, property insurance for your primary residence or 2nd home does not cover claims incurred as a result of business use of any portion of the property. But it depends on quite a number of factors such as state/local laws and what it says in your policy. Still, you should check that out to cover yourself.
