split the costs and expenses 50/50 since that seems to be business use vs rental use.
business income expenses go on schedule C rental income and expenses go on schedule E. your issues are as follows:
determining its tax basis for depreciation purposes - it must be depreciated for both schedule C and rental purposes
if you have a mortgage on the property the mortgage interest must be allocated among the residence and the garage and then the portion allocated to the garage split 50/50. the same would apply to. the same with taxes
other expenses such as utilities would need to be allocated in some logical manner.
as a suggestion, since you should know your cost basis for the whole property you could subtract out your best estimate of what the land cost was. the remaining cost would be for the residence and the garage and you could use square footage to allocate this remaining cost. remember the garage is now business property so the cost of the garage would need to be depreciated over 39 years. your other option is to get an appraisal.
