How do I calculate rental expenses for a garage?

[faithparkinson]

We rent out half or our 2 car detached garage to a friend for storage purposes and he also uses the area to work 2-3 days a week.  There's a AC window unit he uses or a small heater as the weather dictates, but otherwise the garage is 'unfinished.'  I'm confused about how to calculate rental expenses.  Do I take the square footage of our house and garage and then figure out the percentage he is using?  If he were renting a room in our house, it would be more straight forward, but I guess my holdup is that it's unfinished space.  Does that matter?

[MinhT · Accepted solution]

I understand that you wish to calculate how much you could deduct for electricity expenses related to the rental. It does not matter that it is unfinished space.

There are no strict rules on this as long as you can justify a reasonable method. If your tenant uses the garage say 50% of the time and the area of the rented garage is say 10% of the total area of your home, you could deduct 5% (50% of 10%) of your total electricity bill.