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Room Rental of Primary Residence

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    #16
    Originally posted by FEDUKE404 View Post
    I do not think the example you cited (http://www.irs.gov/pub/irs-pdf/p527.pdf - right column on page 22) is consistent with this discussion.

    The beach cottage referenced in the IRS example had a fatal flaw when the actual rental property, viz the cottage, was also used for "excessive" personal use.

    For the home-owner renting out rooms in the house, those rooms "stand alone" as separate rental properties. Hence the allocation of operating expenses, depreciation, etc.

    Unless the home-owner uses those rooms for personal purposes, I do not see why a rental loss (properly calculated, of course!) could not be used as an offset to other income. Conceptually the situation is not that much different from a person who owns a duplex and rents half and lives in the other half.

    FE
    I only referenced the "Limit of Deductions" on the bottom of that column. Sorry for not making this clear.

    The difference between renting out rooms in your home and a duplex is, 1. The duplex has a separate entrance, 2. The occupant does not use any of the "common rooms".

    I still don't see how the limitation on losses would not apply.

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