Since tax season is coming up in a couple months, I want to make sure I understand my optimal tax strategy.

I will be claiming the standard deduction (12K) on my personal tax filings. No way I can match this amount with itemized deductions.

I am renting out one bedroom of my 2b1b, which means I can deduct half of my business expenses. I started renting the room Aug 18th last year and made $2750 total. These are my itemized business deductions:

Chimney Fix - 2250 / 2 = 1125

Water Heater - 1640 / 2 = 820

Dryer - 900 / 2 = 450

Property Taxes (5 months) - 1000 / 2 = 500

Mortgage Interest (5 months) - 2000 / 2 = 1000

Total deduction = 3895

Therefore could I claim a loss of ($2750 - $3895) = $1145?

And on a side note, is it worth getting a CPA for my house hacking situation or is it simple enough for TurboTax?

Thank You!

@Ashish Balu, 

You cannot deduct half of your expenses. It's more complicated than that. 

You need to hire a professional. There are 20+ CPAs and accountants on this site that specialize in real estate taxation. Reach out to a few so you can get some help.

Good luck. 

@Asish Balu hands down some of the best advice I have received was to get an accountant. I paid a bit extra to also go back and correct some discrepancies but totally worth it in the long run. I was able to better my situation and even qualified for my next deal faster than I would’ve on my own.

Good luck to you.

@Asish Balu

You're on the right track, but details are more complicated than this. You may be able to deduct the resulting loss if your total income is not too high, under $150k.

Using a professional is always a good idea. You can skip it if you're willing to invest enough time into learning more about taxes yourself or if you're OK with making some mistakes on your taxes. Your numbers at this point are low, so your mistakes will not be huge, either. But mistakes are likely.

Example: you need to start depreciating the rental portion of your property. So you either study depreciation yourself, hire a pro, or leave this deduction on the table.

Thanks for the response. I'll hire a cpa and learn all the details... next time Ill attempt to do it on my own

@Asish Balu

"I'll hire a cpa and learn all the details... next time Ill attempt to do it on my own"

If that is going to be your strategy most tax practices will not onboard you.  Most of us are looking for long-term relationships, not someone who turns to us during the "hard" years and then attempts to DIY the "easy" years.  Just some insight and my two cents.

@Eamonn McElroy

Thanks for the insight. I imagine that taxes will only get more complicated as my portfolio grows, so I agree that forming a long term relationship with a CPA is beneficial to both parties.