Renting a room in your home: how rent and expenses are reported

Is rent from a roommate or lodger taxable?

Yes, in general. The Schedule E instructions tell you to report rent on line 3, including rent for a room or other space, and to report the fair market value of services or property you accept instead of money. There is one narrow exception in Publication 527 for a home rented fewer than 15 days in the year, where the rent is not income and the related costs are not rental expenses.

How to divide shared costs

Publication 527 treats a home you rent part of as if it were two pieces of property, one rented and one personal. You may divide costs with any reasonable method and the publication names two: the number of rooms, or square footage. Whichever you pick, use it for every shared cost and keep it the same from year to year.

• Costs of the room alone, such as repainting it after a tenant leaves, are fully rental expenses.
• Shared costs, such as the mortgage interest, property tax, insurance and utilities, are divided by your method.
• The personal share is not a rental expense. The publication says the types of expenses deductible for the personal part do not change.

Example a made-up 1,500 square foot home has a 150 square foot bedroom rented for $700 a month, and a bathroom shared with the tenant that you count as personal space. The room is 150 / 1,500 = 10% of the home. A $2,400 yearly homeowner insurance bill gives a rental share of 10% x $2,400 = $240. Rent for the year is 12 x $700 = $8,400.

Records to keep

You need rent received, the date and who paid, a short written lease or rental agreement, the floor plan or measurements behind your split, and bills for every shared cost. Pay rent into a bank account you use only for rent where you can, so the deposits show the income without sorting.

Reporting is separate from your lease and local rules. Many cities and homeowner associations limit renting a room, and your lender or insurer may need to be told. Check those before you rent.

Mistakes that cause trouble later

• Counting shared space twice. A kitchen or bath you share with the tenant is part of your home too, so decide once how to treat it and stay consistent.
• Deducting the whole utility bill. Only the rented share is a rental expense.
• Forgetting rent paid in services. The Schedule E instructions say to report the fair market value of services or property you receive instead of money.
• Skipping a written agreement. A page that lists the rent, the due date and the house rules prevents most disputes and shows that the rent is real.

Depreciation is a separate topic that is easy to overlook. If you rent part of your home, the rented share of the building may be depreciated, which has consequences when you sell. Ask your preparer about it before you claim or skip it.

Example a made-up owner rents a room for 10 months at $700, then it sits empty for 2 months. Rent received is 10 x $700 = $7,000. The 2 empty months produce no income, and the owner still divides the shared costs for the whole year by the same 10% room share.

How DoorKeeping handles it

DoorKeeping tracks each tenant's rent and the memo and exact amount that identify their payment, and keeps expenses by Schedule E line. It does not choose your split between personal and rental space, and it gives no tax advice, so keep your method and share it with your preparer.

Sources

1. IRS, Publication 527, Residential Rental Property, read Oct 30, 2026
2. IRS, Instructions for Schedule E (Form 1040), 2025, read Oct 30, 2026

Questions

Can I deduct the whole mortgage if I rent out one room?

No. Only the rented share of shared costs is a rental expense. The rest is personal.

What is a reasonable way to divide expenses?

Publication 527 names the number of rooms and square footage as common methods. Use one consistently.

Is rent for a room reported differently from rent for a whole unit?

No. It goes on Schedule E line 3 like other rent. The difference is in how you divide the expenses.