We lived 365 days in the first and second floor. We rented out the basement for 7 months, the other 5 months we lived in it. Up till May '17 it was 100% ours.

[chisle]

Dec '17, it became 100% ours again.

Do we state that we converted it from personal to rental in 2017, then back again in 2017? Do we touch the conversion question at all?

[EricZ · Accepted solution]

No, you do not state that you converted it to a rental in 2017, however you must report the income that you received from renting the basement in your home.  You are allowed to deduct expenses associated with renting the basement in your home.

Expenses for your entire home must be divided between the part you rent and the part in which you live. This includes payments for:

• mortgage interest
• repairs for your entire home—for example, repairing the roof or furnace, or painting the entire home
• improvements for your entire home—for example, replacing the roof
• homeowner's insurance
• utilities such as electricity, gas, and heating oil
• housecleaning or gardening services for your whole home
• trash removal
• snow removal costs
• security system costs, and
• condominium association fees.