Rental income/loss

[Pacun]

Tax payer has 2 houses. 1 for rent and 1 where he lives in. He also rents half of the house he lives in. As a landlord, he does all the activities regarding renting both places (he shows the properties, collects rent, decides on repairs, etc).

He is single and his W-2 shows income for 50K. His rental shows 10K losses on the rental house and 6K losses from the house where he lives (mainly because of depreciation).

How much of those losses can he use against his income?

[mcb39]

Schedule E, page 1....all of the loss would be deductible against his W2 Income.

[joanmcq]

Is he renting a room or rooms in his home, or does he live in a duplex? The rules are different between renting a portion of your personal residence and renting half of a duplex.

[Pacun]

Is he renting a room or rooms in his home, or does he live in a duplex? The rules are different between renting a portion of your personal residence and renting half of a duplex.

He is renting a whole house and 50% of the rooms from the house he lives in (no duplex). Houses are 2 blocks away from each other.

[joanmcq]

If its rooms in the same home, only the areas for the exclusive use of the tenant are deductible, (following the OIH rules) and no losses are allowed. Areas used both by the tenant and the owner are considered personal use areas. So if he rents out two bedrooms and a bath for exclusive use by the tenant, but the living room and kitchen are shared, the LR and kitchen can't be used in the square footage calculations for deductible rental expenses. However, if there is a basement apartment or some such fully contained rental area (and no areas are shared), I would treat it as a duplex.