Q. Am I allowed to deduct a net loss since I use it for personal use?
A. No. And you have identified the reason: you have personal use.
If this is merely a cost sharing arrangement where the amount paid is below fair market rental, there would be no reportable income to you. If the “rent” amount is fair market value, or more, there is still some question as to whether you even have to report it, as it almost always comes out zero. Most people take the attitude that it is not income; it's just room mates sharing expenses and ignore it. Family, as opposed to unrelated roommates, makes that position stronger.
Even if you report the rent received as income (on Sch. E), your deductible expenses will most likely exceed your income, so you'll have no net taxable income.. Because this is your personal residence (in addition to being a rental property); and you use it most of the year (the 14 day or 10% rule), you are precluded from claiming any rental losses. You are only allowed to deduct expenses up to the amount of the income. Almost everybody in your situation comes out with a zero sum for tax purposes.
