Rented my primary residence 2017. Reviewing expenses (splitting personal & rental), looks like I am at a loss. Can I deduct? ($500/month rent, $12k expenses)

[jjoseph]

Rented my primary residence all of 2017. After reviewing expenses (splitting personal & rental), looks like I am at a loss of about $6k. Can I deduct this still? ($500/month rent, $12k expenses). What are the limits? The IRS information provided online is a bit confusing for Chapter 5 - dwelling unit. 

[MichaelDC]

Did you rent a room and live in the house yourself? or did you rent the whole house the whole of 2017?

[Opus 17]

Did you charge a fair market rent (rent similar to rent charges by other landlords for similar properties in the same area)?  Or did you give the renter a below market rate?

[jjoseph]

The person was basically a roommate so he had access to the whole house. I put together a rent agreement in the beginning of 2017 stating $500/month as the typical rent around here for a town home was approximately $1000/month.  Given that I was living in the house as well, I decided to split the going rate in half.

[MichaelDC · Accepted solution]

This should help your situation. Please feel free to post any additional details or questions in the comment section.

From SuperUser Hal_Al:

"If this is merely a cost-sharing arrangement where the amount paid is below fair market rental, there would be no reportable income to you. If the “rent” amount is the fair market value or more, there is still some question as to whether you even have to report it, as it almost always comes out zero. Most people take the attitude that it is not income; it's just roommates sharing expenses and ignore it. 

What you are NOT allowed to do, because it is your own home (you have "personal use") is claim a loss from this activity, to offset other income. Because of the "personal use rule", your deductions are limited to your income. Net effect ZERO."

[jjoseph]

It's not cost sharing. I have a rental agreement with him stating that he owes $500 a month to me, the owner. I expected this to offset half the expenses. This; however, didn't and now I am a loss (from 50% of the total expenses). Would I be able to claim this rental income and then the corresponding expenses?

[MichaelDC]

Unfortunately, as in the answer, the best you can do is break-even from a tax point of view: "What you are NOT allowed to do, because it is your own home (you have "personal use") is claim a loss from this activity, to offset other income. Because of the "personal use rule", your deductions are limited to your income. Net effect ZERO." Hope this helps.