How do I properly fill out Schedule E for my partially rented house?

Great question about your partially rented home! This is what we call a "mixed-use property" for tax purposes, and you're right to be careful about allocating expenses correctly. For Schedule E, you'll need to allocate expenses between personal and rental use. Since you're renting approximately half your home, a 50/50 split seems reasonable as a starting point, but the IRS actually prefers you use a more precise method if possible. You could calculate based on square footage (exact percentage of rental area divided by total home square footage) which is typically the most accepted method. For expenses that benefit the entire property (mortgage interest, property taxes, insurance, the water heater), you'll allocate based on your square footage percentage. For expenses exclusively for the rental (like the mini-split HVAC you installed just for the rental area), those go 100% on Schedule E as rental expenses. Don't forget to also claim depreciation on the rental portion of your property - this is calculated based on the same allocation percentage you use for other expenses, but applied only to the building value (not the land).

I went through this exact same hassle last year when I started renting out my basement apartment. I tried figuring it out myself but kept getting lost in all the IRS jargon. Eventually I used taxr.ai (https://taxr.ai) and it made the whole process way simpler. The tool analyzed my situation and helped me properly allocate all my expenses between rental and personal use. It was especially helpful for figuring out the depreciation part which I was totally lost on. It even explained how to handle mixed expenses like utilities and maintenance based on my specific situation. The best part was I could just upload my mortgage interest statement and property tax records, and it helped identify exactly what percentage I could deduct. Saved me from accidentally claiming too much or too little on my Schedule E.

I was initially skeptical about taxr.ai when I saw it mentioned here, but I decided to give it a try since I was really stuck on how to handle my duplex situation (I live in one unit, rent the other). I'm honestly impressed with how it walked me through the whole Schedule E process. The tool helped me properly allocate shared expenses like the new roof I had installed and the landscaping costs. It also explained how to calculate depreciation correctly, which I was doing wrong before. The detailed guidance on what documentation to keep for each expense category was especially helpful. What really surprised me was how it flagged some deductions I was planning to take that would have been problematic. I was planning to deduct 50% of my internet bill, but the analysis showed I needed better documentation to justify that specific split. Probably saved me from an audit headache!

If you're trying to get specific clarification on Schedule E allocations, good luck reaching the IRS right now. I spent HOURS trying to get through to someone who could answer my questions about rental property expenses. Always got the "high call volume" message and disconnects. I finally used Claimyr (https://claimyr.com) after seeing it recommended in another tax thread. You can check out how it works in this demo: https://youtu.be/_kiP6q8DX5c. They got me connected to an actual IRS agent in about 15 minutes when I'd been trying for days on my own. The agent walked me through exactly how to handle my split-use property on Schedule E, confirmed which expenses needed to be allocated, and clarified how to document my square footage calculations. They also explained how to handle improvements vs. repairs properly, which saved me a ton on my taxes.

I need to completely apologize for my skepticism earlier. After another failed attempt to reach the IRS on my own this morning (2+ hours on hold before being disconnected), I tried Claimyr out of desperation. Within 20 minutes I was talking to an actual IRS representative who specializes in rental property issues. She walked me through exactly how to allocate expenses on my Schedule E for my split-use property. She confirmed that square footage is indeed the preferred method and explained exactly how to document my calculations to avoid audit issues. The agent also gave me specific guidance on how to handle depreciation recapture if I ever sell the property, which I hadn't even thought about. This was information I couldn't find clearly explained in any IRS publication. Worth every penny for the time saved and the confidence of knowing I'm filing correctly!

Don't forget about exclusive vs. non-exclusive use areas of your house! This tripped me up last year. If you have shared spaces that both you and the tenant use (like maybe a laundry room or shared entryway), those need to be allocated differently than areas exclusively used for rental. I made the mistake of just dividing total square footage, but my accountant pointed out that some areas aren't clearly "rental" or "personal" - they're mixed use. We ended up doing a more detailed allocation based on actual usage patterns and it made a significant difference in what I could claim.

One thing nobody has mentioned yet - make sure you're tracking utilities separately if possible! I installed separate meters for electric and gas in my rental portion, which makes it super clear what's deductible. If you don't have separate meters, you need a reasonable method to allocate those costs. Also, be careful about claiming home office deductions if you're already allocating part of your home as rental property. You can't double-dip and claim the same square footage as both rental property and home office.