First, you have to prorate your property into rental and personal use by square footage. Any area that is available for common use is considered the personal portion. So even if your tenant uses your kitchen, everything done to improve that area is still personal. You can add improvements to the basis of your home which can help at sale time.
If an improvement relates to the rental section only, you can depreciate it. If a repair relates to the rental section only, you can deduct it. If an expense relates to both areas, you would prorate the expense the same percentage as you did the property.
The only things that you can personally deduct are mortgage interest and property taxes. Your portion is entered on Schedule A. The rental portion is on Schedule E.
