Rental expenses

[Pacun]

To make matters simple... Tax payer has a two floor house (first floor and basement). He lives in the basement and rents the 3 rooms on the first floor. Depreciation is 50% rental and 50% personal. Rent contracts state that utilities are included in the rent (gas, cable, electricity, water, and internet access). Each room has two tenants and each tenant has a laptop and TV (to make matters simple). All of them cook and shower (very important).

Can he claim 6/7 utility expenses on schedule E? I know 50% is the conservative answer but I want to see what you think.

[kcjenkins]

You make a good case for doing that, if his space is the same size as half the bedrooms above.

[jainen]

>>He lives in the basement and rents the 3 rooms<<

This sounds more like room rental than a duplex. I always recommend extra attention to record-keeping when there are common areas and a mix of personal and rental use.

Although space is the most common method to divide expenses, you are not stuck with it if you have good records. See page 17 of Pub 527. "You can use any reasonable method for dividing the expense. It may be reasonable to divide the cost of some items (for example, water) based on the number of people using them."