If you exceed the 14-day limit (meaning your property was rented out for more than 14 days in a given tax year), then you can deduct a portion of the expenses associated with maintaining your property. Big ticket examples include property taxes, utilities, wifi and even rent!
You’ll need to be careful to only deduct the portion directly attributable to your business. To do so, you'll need to calculate what percentage of the time your property was used by you for personal reasons, versus what percentage of the time it was rented out to others. You'd then use that occupancy percentage to determine the portion of your expenses that is deductible.
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!
If you rent a room in your home while you also continue to occupy the property, 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 (in that example, the guest occupancy is 50%). Once you have calculated a rate of occupancy, you’ll multiply this percentage by the amount of space the rental constitutes.
Consider that same ski cabin again. This time, imagine you occupy the 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.