Hi all,
I've been renting all 3 bedrooms in my house that I also live in (my bedroom is the office with no closet) and struggling with several complicated questions. I've read through many posts on here and elsewhere, but still cannot find much in the line of definitive answers.
I purchased the house in 2021, and immediately rented rooms out to my friends. In 2022 they stayed part of they year then moved out. I wasn't able to find a good roommate until 2023. However, in order to get this roommate, I had to sacrifice renting one of the rooms because he didn't want a third roommate. So, I'm renting him 2 bedrooms. There is a open area with a kitchen / living room. I don't use the living room area at all and tell my roommates it's all theirs.
Question 1.
If the area / space I'm renting changes from year to year, (ie I decide to no longer rent out the 3rd bedroom, or decide not to rent and rooms at all), then each year the percentage time I enter under asset (actually space), would be different each year. How would that effect the capital gains recapture calculation when I sell the house? Would I just look back and see how much I claimed each year I owned the house? Or is this variable rental area going to be a problem each year? I just want to understand now before creating a problem in the future.
Question 2.
If I eventually sell the house and it's still my primary residence (or has been for 2 of the last 5 years), am I still eligible for the full capital gains tax exemption?
Question 3.
I missed adding the asset and depreciating in last years TT filing and going to have to go add that back in as an amendment. I'm scared because this will result in less of a tax burden. Is there anything I should be aware of?
Question 4.
I see and have heard multiple opinions on this, and even when having TT reps call me. I see you can either use number of rooms rented or square footage. It doesn't say bedrooms, just rooms. The 2 rooms I'm renting now are small, and I'm offering the living room space. I'm not sure which way to go here.
Question 5.
I've seen multiple opinions on expenses outside of mortgage interest, insurance, and taxes. Once I determine the correct percentage to use, it seems some people are using a different percentage for certain expenses like utilities based on the number of people renting. However part of the year the house is not rented while I'm looking for a new roommate. How do I deal with this?
Question 6.
In TT 2022, where it shows the expenses for 2021 for reference, it's showing double the value if what my actual paper Schedule E for 2021 shows. When I go to amend my 2021 Schedule E, it matches with the values in the paper schedule E. Is this some sort of bug, or why would TT show double? In 2021 I forgot to put anything in for depreciation, and also entered that it was rented 365 days of the year, so it doesn't seem like anything here is affecting what's showing.
