The storage space would be claimed as a home office, or part of a home office. The home office deduction is not allowed for SCH E property. There is no provision for this in IRS Publication 527 unless your rental business qualifies as a trade or business. Then it would be reported on SCH C where the HO deduction is allowed. It takes a lot for rentals to qualify as a trade or business too. The requirements to qualify as such are stringent, and if you do claim a home office/storage space for business use, be ready to prove it 24-36 months down the road. It starts with a paper audit via mail and has the potential to grow from there.
