You can deduct a percentage of your expenses from renting out your property to others, but in order to know how much you can deduct, you'll need to know the percentage of time that your property was being rented by other people.
You'll want to calculate rental occupancy based on the dates the property was actually rented at fair market value (not the dates it was available for rent), as compared with the days you used the property for personal use.
For example, if you rent your whole ski cabin out for 6 month of the year, and occupy the property yourself for the other 6 months, then you can claim 50% of the above expenses for the year as a deduction!
You should count any days you spent in the property primarily for non-business purposes as personal occupancy. Note: Any days you spent working full-time on repairing and maintaining the unit—even if family members used it for recreational purposes on that same day—do not count towards personal occupancy.
If you rent a room in your home while you continue to occupy it, apportioning your expenses includes an extra step.
Similar to the previous example, you’ll begin by apportioning your expenses based on the rate of guest occupancy. Once you have calculated a rate of occupancy, you’ll multiply this percentage by the amount of space the rental constitutes.
Imagine you occupy that same cabin all year, but you also rent out two of four bedrooms for 6 months of the year. We can take our same rate of occupancy (6 months out of 12 = 50%) and multiply it by the proportion of space occupied (2 of 4 rooms = 50%). Multiplying these two numbers gives us a deductible business percentage of 25%.
If you prefer not to calculate occupancy by bedrooms, you can also perform a similar calculation using square footage. For example, 1000 square feet of a 2,000 square foot apartment would constitute 25% of the space.
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