So I have a similar situation where I am renting out a room in my house. IRS rules are very convoluted in my opinion with this situation. So followup questions are:
1) I purchased house/land in 2007 that my family has resided in continuously as our primary residence. I began renting a bedroom in 2021 for income purposes. How do you value the asset? The bedroom is 17% of the total house square footage so I apply that to house utility expenses, etc. But is the value of the room that I put into service for rental purposes in 2021 based on the fair market value then or what it was in 2007?
2) Regarding depreciation on rental improvements like carpeting and appliances, is there a recapture tax in the future?
3) Regarding depreciation on the rental itself, can you confirm that even if you don't deduct it, there is still a recapture tax owed to IRS?
4) Can you confirm that you can still take the $500,000 capital gains reduction (for joint filers) when you sell the home of which you rented out a room for a number of years.
5) Are there any issues here affected by CA tax rules since I reside in CA.
