Primary residence vs rental allocation

[hnguyen01]

Hi,

I have a triplex that I live in, renting the first and second floor while living in the third. As a result Turbotax allocates a % to my personal income taxes and a percentage as an investment.

What is the most appropriate way to allocate primary vs rental?

Is it by number of bedrooms? Square footage? And how is a private unfinished basement for my own use counted?

[Mike9241 · Accepted solution]

the right answer is whatever method would most properly allocate expenses which really isn't an answer

Typically, you can divide the expenses for rental and personal use based on either:

• The square footage of the rental space versus that of your entire house (e.g., 250 square foot room rented / 2,500 square foot house = 10% of expenses are deductible).
• The number of rooms rented out versus the total number of rooms in your house (e.g., two rooms rented / 10 rooms in the house = 20% of expenses are deductible)

• for the following type of expenses
• Mortgage interest 
• Repairs
• Improvements
• Homeowners insurance
• House cleaning or gardening services(?) the IRS may deem landscaping gardening as 100% personal
• Trash removal
• Snow removal
• Security system costs
• Depreciation

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certain other expenses may be more properly allocated based on the number of people in the home

like utilities

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in your situation with use of the basement that complicates matters. However, I think square feet, including the basement, is most appropriate. 

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others may have a different opinion