- the space has to be calculate using sqrt ft? and only count for her room and bathroom. the proportion of that will use to calculate for mortgage, insurance etc.
Yes. You should be able to find the total square footage of the house on your local property appraiser's website. For example, my house is appraised based on 1825 sq foot of living space. One of my 4 bedrooms is 12 X 16 which is 192 sq ft. The closet in that room is 3ft by 4ft which comes to 12 sq ft. So the total space that is exclusive to the renter is 204 sq ft so far. I have 3 baths in my house and one of those baths is only accessible from the aforementioned bedroom. So that bath is exclusive to the renter. It measures 8ft by 10ft which is another 80 sq ft. So total space exclusive to the renter is 284 sq ft, which is 15.56% of the total floor space.
Based on that, 15.56% of my insurance, mortgage interest and property taxes can be claimed on SCH E. The difference is a SCH A itemized deduction.
- the utility bills, can I use the count per room? if it's 4 bedrooms and I rent out 1 room will it consider 25%?
Not quite...at least not per my understanding and interpretation of the IRS pub.
For starters, I only have one landline telephone in my house. None of that is deductible on the SCH E because the use of that one telephone line is not exclusive to the renter. Doesn't matter if I have an extension phone in the renter's room either.
For cable, there's myself and my wife. A renter would make a 3rd person. If I actually have a working cable connection in the renter's room, then I can claim 33% of my cable bill as a rental expense. There's nothing that clarifies this, but it appears I can claim this weather the renter actually uses that cable drop or not.
For water and electricity, I can claim 33% of those bills on SCH E since each occupant in my house uses 33% of those utilities on average.
For internet, there's really no clarity here at all. But if you have wireless in your home and you do make it available to the renter (and I would assume they would also need the means to actually use that Internet) I see nothing that would prevent or prohibit me from claiming 33% of that internet cost as well.
This can get tricky when you have bundled services. For example, land line, internet and TV through a cable provider. You'd have to separate out the land line since you can't claim your telephone on SCH E, and then claim 33% of the remaining.
Overall though, I've never even heard of anyone being audited on this stuff. Yet I can't claim that it's never happened to someone and I certainly can't claim that it won't happen either. Generally for an individual to get audited there has to be something that "sticks out" on a tax return. For example, if you claim $30K in cotributions to a qualified charity when in the past you've averaged say, $1000 a year. Or if you have a sudden and drastic change in income that not reported on the tax return, yet your return indicates a drastic change in lifestyle. (Like moving from that $150,000 house into a multi-million dollar mansion.) That can and does happen when someone gets a large inheritance from that rich uncle who passed away that tax year.
Bur for us "normal" tax payers like you and me, about the only way we get audited is if our number comes up on those random draws the IRS does at times.
