Found an answer in the Turbotax program to question 3) --
What if I rent out part of my home to somebody?
If you rent out part of your home, you should subtract the square footage of that rented portion from your total square footage of your entire home.
For example: if your home is 2500 square feet and you rent out 500 square feet then enter 2000 as the square footage for the entire home.
If you own your home:
If you rent out part of your home, you should subtract the mortgage amount you entered for your rental from the total mortgage interest amount.
For example: if the total mortgage interest you paid on your home was $10,000 and $500 of that was the amount for the area you rented out, then you should enter $9,500 as the total mortgage interest.
