Renting out Rooms in Primary Residence / Interest Deduction
Hey guys--
I have a semi-complicated issue involving renting out rooms in my primary residence and how the mortgage interest / property tax deduction can be applied.
I own and live in my house and also rent 2 rooms.
Here are the financials for 2017 (numbers are not exact):
Total Rental Income = $10,000
Total Expenses, Depreciation, etc. NOT including mortgage interest / property tax = $12,000
Mortgage interest = $8,000
Property tax = $2,000
Total Deductions = $12,000 + $8,000 + $2,000 = $22,000
So you can see that the $12,000 alone is sufficient to nullify the rental income.
The question then:
Can I reflect the full $8,000 mortgage interest and $2,000 property tax on Schedule A, as I would on a normal primary residence that I was not renting out?
OR
Am I forced to allocate the expenses according to the proportion of the house that is rented vs. the proportion I live in? So then 2/3 goes to Schedule E and is wasted, and only 1/3 goes to Schedule A.