You can rent one apartment in your duplex.
When you rent out part of your home, common expenses have to be apportioned between personal use and business use (rental) of your home.
You need to calculate the percentage of business (rental) use. One common method is to divide the square footage of the rented portion by the total square footage of the house.
In the rental section, you will deduct as rental expenses the rental portion (total costs multiplied by the percentage of business use) of each common cost (such as mortgage interest, property taxes, utilities…). You also claim other costs related to the rental such as repairs and maintenance, etc..
In the personal section, you will claim in Itemized deductions the personal use portion of mortgage interest and property taxes.
Please read this IRS publication, paragraph on Renting Part of Property on page 16.
I think that @MinhT1 may be making some assumption here without know if those assumptions are correct. If you lived in one of the two units as your primary residence, then what @MinhT1 says is spot on correct. However, if you did not live in one of the two units as your primary residence, more information needs to be provided in order to provide you the correct information.
- Were both units "available for rent" in 2021?
- Did you acquire the property in 2021? If so, how? You purchased it? Inherited it? Were gifted it?
- Maybe you only had one unit rented because the other unit was having major work done on it with the intention of renting it out as soon as possible once that work was/is completed?
- You say that only one unit was rented "the full year". Maybe the other unit was rented part of the year?
Details can make a huge difference here.
We own rental properties it is our business. We never lived in the house and one of the tenants left half way through the year and the other continues to live there. Never used for personal use and it is ready for rent.
Your property is deemed rented the entire year. Just because a unit sits empty for a period of time, does not in any way change it's business use. It's still 100% business use. Provided of course, there was no personal use during that period of vacancy.
For days rented, go ahead and select the whole year. Vacant periods between renters do not count against you if there's no personal use. Generally, you need a week, sometimes quite a bit longer to get the property ready for the next renter. Once ready and so long as you start advertising it for rent once it's ready, you're good. Especially if you actually do get a renter in it - even if that happens in the next tax year.
When dealing with a duplex or multiplex unit and treating it as a single asset on the SCH E, you can run into big problems with the math when you have personal use of just one of those units, or any space within a unit. It can also create a nightmare if the owner decides to move into one of the units, when it comes to the manual mark and math required to get things right on the tax return.