rental of persona home

[Roberts]

I have a really old client who is basically broke and to make end meet she took in another old lady to rent part of her house. They each have their own bedroom and bathroom and the rest is shared equally.

I read the IRS will accept a reasonable distribution between personal space and rented space but how do you depreciate a home like that? Do you adjust the cost basis of the home to just that percentage you are using as rented property? I'm at a complete loss on this one.

[Lion]

%

Does your software allow you to enter the % and it does the math for you?

[Gretel]

Another thought: Does your client actually make money from renting, or is he basically sharing costs? If he is basically sharing costs I would treat it as such and not like a rental.

[Roberts]

Does your software allow you to enter the % and it does the math for you?

Doesn't allow a %. I've made a note outlining the true cost basis and the method used to adjust the cost down for depreciation purposes. Hopefully that's enough.

[Davc]

This falls under the "home office" rules. You only depreciate the portion of the house that's exclusive use by the renter.

[oceanlovin'ea]

I agree with Gretel. I don't think this is rental income. People are just trying to survive today. If she didn't have someone come in and live with her and help with expenses she might be on the street.

I think it is just like roommates. Young people do that all the time.

Linda, EA

[Burke]

I am going to side with the non-rental group as well in this case.