What expenses can I deduct for minor improvements and maintenance on a Live-in Rental Property?

I'm honestly so confused about what I can and can't deduct on my taxes for my home. I live in the upstairs of a house that I own, and I rent out the basement to two tenants as a separate unit. They've been there about 8 months now. This year I've had several expenses that I'm not sure if they count as deductions or not. I replaced some broken blinds in the basement ($175), fixed a leaky faucet in their bathroom ($95 for parts, did it myself), repainted their living room ($300 for supplies and hired my nephew to help), and upgraded the old thermostat to a programmable one ($120). I also did some work on the shared spaces - replaced the front porch light ($65), fixed the garage door opener ($220), and had the whole house re-keyed ($180). For my own living space upstairs, I replaced carpet in my bedroom ($1400) and installed a new kitchen faucet ($85). I tried reading through the IRS website but got totally lost in all the tax jargon about "improvements vs repairs" and what counts when you live in part of the property. Can someone just give me a straightforward answer about what I can deduct, what percentage, and where I enter this on my tax forms? Thanks!!!

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18 comments

Raúl Mora

•8M

What you're dealing with is a common question for owner-occupied rental properties! The key is distinguishing between repairs (fully deductible for the rental portion) and improvements (which must be depreciated over time). For expenses that only benefit the rental portion (basement): Blinds ($175), bathroom faucet repair ($95), and repainting ($300) are all considered repairs and fully deductible as rental expenses. For shared expenses like the porch light ($65), garage door opener ($220), and re-keying ($180), you can deduct the percentage that represents the rental portion of your home. Calculate this based on square footage - if the basement is 40% of your total house square footage, you can deduct 40% of these expenses. For items only in your personal living space (bedroom carpet, your kitchen faucet), these aren't deductible at all since they don't benefit the rental. The programmable thermostat ($120) is tricky - if it only controls the basement, it's fully deductible. If it's for the whole house, you can deduct based on your rental percentage. Report these on Schedule E of your tax return. Keep detailed records of all expenses and how you calculated the rental percentage!

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Raúl Mora

•8M

For the thermostat that controls both units, you would still deduct based on the rental percentage (square footage). While it benefits the whole house, you can only claim the rental portion. The fact that it saves on the overall energy bill doesn't change the tax treatment. For depreciation vs repairs, there's no automatic dollar cutoff at $500. The IRS has a "de minimis safe harbor election" that allows you to immediately deduct items costing less than $2,500 per invoice (for most small landlords), but you still need to consider whether the expense is a repair (maintains the property) or an improvement (adds value, prolongs useful life, or adapts to new use). Even a $100 item might need to be depreciated if it's considered an improvement rather than a repair.

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Evelyn Kim

•8M

I was in a similar situation last year with my duplex - live upstairs, rent the downstairs. Drove myself crazy trying to figure out what was deductible! I finally used https://taxr.ai to help sort through all my receipts and maintenance records. What helped me most was their breakdown of what qualifies as a repair vs. capital improvement. I uploaded my receipts and it categorized everything, then explained the percentage I could deduct based on square footage. Saved me hours of research and probably prevented me from making mistakes that would have triggered an audit. The tool confirmed that things like your leaky faucet repair and repainting are 100% deductible for the rental portion, while your personal space expenses aren't deductible at all. For shared expenses, they help calculate the exact percentage based on your property layout.

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Evelyn Kim

•8M

Yes, it absolutely helped with the tax forms! It organizes everything for Schedule E and explains which line each expense goes on. It doesn't directly integrate with TurboTax, but gives you a detailed report you can follow while entering info into any tax software. It definitely saved me money compared to guessing. In my case, I was actually being too conservative with deductions. I wasn't properly tracking shared expenses like lawn care and utilities, and I was missing out on depreciation for appliances. The tool showed me I could legitimately deduct about $3,200 more than I had been. Just make sure you have documentation for everything in case of an audit.

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Henrietta Beasley

•8M

I have to admit I was wrong about these tax tools! After seeing the comments here, I tried https://taxr.ai with my rental property expenses (I also live upstairs and rent my basement). The analysis caught several deductions I've been missing for years! The biggest surprise was learning I could partially deduct my homeowner's insurance, property taxes, and mortgage interest based on the rental percentage. I'd been deducting repairs in the rental unit but completely overlooking these bigger expenses. It also helped me understand depreciation better - I wasn't depreciating the rental portion of my house structure correctly. I'm actually planning to file amended returns for the past two years based on what I learned. The tool estimated I left about $4,800 in legitimate deductions on the table! Now I keep much better records of everything.

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Lincoln Ramiro

•8M

Anyone else here frustrated with trying to get through to the IRS for clarification on rental property questions? I spent HOURS on hold trying to get answers about whether my garage door opener repair was a capital improvement or a repair expense. Finally gave up and started using https://claimyr.com to get through to IRS agents. You can see how it works here: https://youtu.be/_kiP6q8DX5c It's the only thing that actually got me through to a real person at the IRS. They had me talking to an agent in about 20 minutes when I had previously wasted entire afternoons on hold. The IRS agent I spoke with gave me official guidance on several questionable deductions I had for my rental property, which gives me peace of mind that I'm filing correctly.

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Lincoln Ramiro

•8M

It works by using technology to navigate the IRS phone system and wait on hold for you. When they reach a real IRS agent, you get a call connecting you directly. It's not some third-party advisors - it's the actual IRS agents you'd reach if you waited on hold yourself. I was skeptical too, but it's legitimate. You provide the reason for your call and any relevant information upfront, then go about your day until they call you with an agent on the line. It saved me from wasting hours on hold just to ask about rental property deduction rules. I think people don't know about it because most just give up on calling the IRS altogether.

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Emma Johnson

•8M

I need to eat my words about Claimyr not working. After posting my skeptical comment, I decided to try it myself for a rental property question similar to OP's. I had a complicated question about deducting a new water heater that serves both my living space and my tenant's unit. I was seriously shocked when my phone rang 35 minutes later and there was an actual IRS agent on the line! The agent walked me through exactly how to handle the deduction (partial deduction based on square footage plus depreciation over time since it's considered a capital improvement). Worth every penny not to waste a day on hold. I'm using this for all my IRS questions going forward. Wish I'd known about this years ago when I first started renting part of my house.

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Liam Brown

•8M

One thing nobody's mentioned yet - you should be tracking all utilities if you're not already. If you have separate meters for the rental unit, those utilities are 100% deductible. If you share utilities, you can deduct the rental percentage. Also, don't forget about deducting a portion of your property insurance and property taxes! And if you ever do yard work or maintenance on common areas, keep track of those expenses or even your own time if you're charging for landlord services.

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Liam Brown

•8M

For the shared water bill, using the square footage percentage is perfectly acceptable and is the most common method. Just be consistent with how you calculate it year to year. For your time spent doing repairs, unfortunately you cannot deduct the value of your own labor when you do repairs yourself - only the cost of materials. However, if you have a formal property management business and charge for your services, that's different. But for most individual landlords who make their own repairs, only the materials are deductible, not your time.

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Noah Lee

•8M

Your accountant is correct! You must take depreciation on the rental portion of your property - even if you don't claim it, the IRS will assume you did when you sell the property and you'll face "depreciation recapture" tax. Basically, you depreciate the rental portion of your property (excluding land value) over 27.5 years. So if 40% of your house is a rental and your house value (excluding land) is $200,000, you'd depreciate $80,000 over 27.5 years, meaning about $2,909 in depreciation deduction each year.

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