What's the right way to calculate depreciation for a rented room in my primary home?

You'll need to allocate based on square footage, not just by person count. First, calculate what percentage of your home is being used for rental purposes. Measure the bedroom and bathroom that are exclusively used by your tenant. Then, you'll need to add a reasonable portion of the common areas. For example, if the rented bedroom and bathroom make up 15% of your home's square footage, and the common areas (kitchen, living room, etc.) make up another 40%, you might allocate half of the common area percentage to the rental (so 15% + 20% = 35% total). Same goes for the garage - if your tenant uses half the garage, include half of the garage's square footage in your calculation. For Schedule E purposes, you should generally use the same percentage allocation for all expenses related to the property (mortgage interest, property taxes, insurance, repairs). For utilities and internet, the 50/50 split could be reasonable if there are only two people, but to be safest for tax purposes, using the same square footage percentage is recommended. The IRS prefers consistent allocation methods. Remember that you can only depreciate the building value, not the land. You'll need to determine what portion of your property value is attributed to the building versus the land (property tax records can help with this).

I went through this exact situation last year when I rented out a room in my house. After spinning my wheels for days trying to figure out the depreciation, I found this tool called taxr.ai (https://taxr.ai) that really helped me sort everything out. It analyzed my situation and walked me through calculating the correct percentage for depreciation based on my floor plan. What I really liked is that it explained the different approaches - square footage method vs. room count method - and which one would be most advantageous in my situation. The tool also helped me determine what portion of my property value was for the building vs. the land, which was super confusing to me at first. I ended up with a solid depreciation calculation that I feel confident about if I ever get audited.

I tried taxr.ai after seeing the recommendation here and I'm honestly impressed. I was totally lost trying to figure out depreciation for the basement unit I rent out. The software asked me detailed questions about my property and explained everything in plain English. What really helped was the specific guidance on common areas - I wasn't sure if I could include the shared laundry room and hallway. The tool explained exactly how to allocate those spaces properly. It even created a documentation file for me to keep with my tax records in case of an audit. I'm not a math person at all, so having something calculate all those percentages and then explain why they were calculated that way was incredibly helpful. Definitely worth checking out if you're renting part of your home.

If you're struggling to get answers from the IRS about depreciation questions (I know I was), I found a service called Claimyr (https://claimyr.com) that actually got me through to an IRS agent in under 15 minutes. I had been trying for WEEKS to get someone on the phone about some complicated depreciation questions for my rental property. Their service basically holds your place in line with the IRS and calls you when they get an agent. You can check out how it works here: https://youtu.be/_kiP6q8DX5c The agent I spoke with walked me through exactly how to handle partial rentals and common areas - turns out I had been calculating my garage space completely wrong for years! She also confirmed that I could use a higher percentage for utilities based on actual usage rather than square footage.

I have to eat my words about Claimyr. After posting my skeptical comment, I decided to give it a try since I've been trying to reach the IRS about a rental property issue for literally three months with no success. It actually worked exactly as advertised. I got connected to an IRS representative in about 35 minutes (they estimated 40, so even a bit faster). The agent answered all my questions about depreciation for my duplex, including the exact percentage I should be using for the shared driveway. For what it's worth, the IRS agent also confirmed that for utilities in a situation like yours, they prefer the same allocation percentage as the square footage unless you have separate meters or some way to prove actual usage. So if you're claiming 35% of your house for rental purposes, they'd expect about 35% of utilities to be claimed as well.

You might want to consider a simplified method as well. If your rental activity is relatively small, you could look at using Form 8829 (for business use of home) as a guide, even though it's technically for Schedule C not Schedule E. The square footage method is definitely the most defensible approach. Just make sure you take photos of the space and keep good records of all your measurements. I learned this the hard way when I got audited for my rental property depreciation calculations a few years back. Also, don't forget that you can only depreciate the structure, not the land. So you'll need to determine what percentage of your property value is the building. Your property tax assessment usually breaks this down, or you can use a reasonable estimate (typically 80% building/20% land in many residential areas, but it varies widely).

Is anyone else noticing that using TurboTax for rental property depreciation is a total nightmare? I've been trying to enter my rental room information but it keeps giving me strange calculations.