[justincaseme]

Hi - I rent out a room in my house for a modest amount, and I also work a salaried day job. I recently did some remodeling work, with the main focus being that bed room (other parts of the house are still in progress). The costs of tools and materials turned out to be several thousand dollars.

1) I've read on IRS.gov that I cannot claim a depreciation deduction, for that room, for more than I've made in rent. This is because I live at the house and renting in not my primary business. Did I understand that correctly? If so, how much of the deduction can I carry forward to future years?

2) Instead of claiming a depreciation deduction, can I claim one-time business expenses (tools and materials)? If I choose this route, can I deduct more than I earned from the rental income? Can I deduct the expenses against my salaried day job?

Thanks in advance!

[justincaseme]

... by the way, only I and the renter live at the house, and he shares the common areas 50% (bathroom, kitchen, garage, living room. Can I therefore deduct 50% of the cost of improving the common areas?

[AtlantaTaxExpert]

1) Yes, that is correct, and there is NO carry-forward at all.

2) No, your rental expenses CANNOT exceed your rental income.

This being the case, you need not even report the rental income on your tax return.