excuse me...
texas.......sorry to interrupt dj ... but halket, so you are saying don't show any depreciation ( it is your option to show this or not?) of any portion so you are not caught up for years in trying to recapture? to show only the rent as income? and no depreciation? i have called the irs about this same situation, and of course they told me to show depreciation and and are sending me numerous publications i'm sure i won't understand. I will probably have my house for many more years, it is not paid for yet, and don't want any long time issues with the irs. is depreciation going to help that much for the few rooms they will let you claim? although my tenant will be using most of my house they told me i could only claim the bedroom and bath he would be using. i am not charging him just for his rooms but for the use of my whole house as if it was his area, as he won't be only confined to his rooms! irs reps can be wrong, is this your opinion also? here is something i got straight off the irs site:
"If you rent buildings, rooms, or apartments, and provide only heat and light, trash collection, etc., you normally report your rental income and expenses in Part I of Schedule E (Form 1040)"...and then this "If you provide significant services that are primarily for your tenant's convenience, such as regular cleaning, changing linen, or maid service, you report your rental income and expenses on Schedule C (Form 1040), Profit or Loss From Business or Schedule C-EZ, Net Profit From Business. Significant services do not include the furnishing of heat and light, cleaning of public areas, trash collection, etc. For information, see Publication 334, Tax Guide for Small Business (For Individuals Who Use Schedule C or C-EZ). You also may have to pay self-employment tax on your rental income. See Publication 533, Self-Employment Tax. " so are they saying since i will providing all of these services that i will have to fill out sched e and c? the irs man also told me if i provided meals i needed also to send in schedule cez for resturant deductions/expenses. these items are straight from the irs site which is kind of a lead in to dj's ? regarding utilities which i would also be interested in. from what i am reading, the irs is saying you can divide utilities up (a percentage?) as to how much the tenant uses as opposed to how much you/your family uses. but not sure what to do with these expenses. the irs told me that i would have to pay self employment taxes also on rental income. 15.3%!! this says you may have to pay but i think it has something to do with how much rental income you make right?
sorry so long, but this is also something i've been wondering about. thanks to all!texas