Regarding the utilities, a percentage based on square footage is a reasonable way to allocate personal and rental expenses.
Regarding the real estate tax, you may want to check with your tax assessor to see if the cottage is included in the property tax valuation.
Here is some reference material from the IRS regarding residential rental property.
Here's how to enter income and expenses from a rental property:
- With your return open in TurboTax, search for the word rentals in the search box.
- Click Jump to rentals in the search result.
- Answer Yes to the question Did you have any rental or royalty income and expenses?
- Follow the on-screen instructions as you proceed through the rental and royalties section.
- We'll first ask you to enter general information about your rental (description, address, ownership percentage, etc.)
- Eventually, you'll come to the Rental Summary screen which is where you enter your:
- Rental income
- Rental expenses
- Capital assets and depreciation
- Vehicle expenses
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