@aspielmansir - you may want to read IRS Publication 523
on page 13, it begins with:
Business or rental usage calculations. Business or rental space that is separate from the living area affect your gain/loss calculations. Examples of space not within the living area include a first-floor storefront with an attached residence; a rented apartment in a duplex; or a working farm with a farmhouse on the property. If you have used part of the home (not within the home’s living area) for solely business or rental purposes for more than 3 of the last 5 years, you need to make separate gain/loss calculations for the business and residence portions of your property.
And I think that is what you were going to do: make separate gain/loss calculations for the business and residence portion of your property
https://www.irs.gov/pub/irs-pdf/p523.pdf
