Renting a room in your home: how the taxes work

By Tom, CPA · Updated October 27, 2026

Part of: Rental Property Taxes

TL;DR: Rent from a room in your home is taxable income, reported on Schedule E. You can deduct the room's share of expenses, usually by square footage, and depreciate that share over 27.5 years. Splitting rent with a co-owner or co-tenant isn't rental income. Renting 14 days or fewer a year can be tax-free under section 280A(g).

Educational only, not tax, legal, or investment advice. Examples are illustrations, not predictions. Rules and limits change; verify current figures and talk to a qualified professional about your situation.

Renting a spare bedroom is the gentlest form of real estate investing. There's no second mortgage and no new roof, just a stranger in the kitchen at 7 a.m. The tax side is simple once you know which bucket you're in: a roommate splitting costs, a tenant paying you rent, or a short-term guest. Each one is treated differently.

CPA Warning Label: The 14-day tax-free rule applies to the whole dwelling unit. If you rent a room long-term, short stays are taxable, and below-market rent to family limits your deductions.

Roommate vs tenant

The key question is whether you're receiving rent or just sharing costs.

• Co-tenants sharing a lease. If you and a roommate both rent from a landlord and split the rent, neither of you has rental income. You're each paying your share.
• Co-owners. If you and someone else own the home together and split costs according to ownership, that's not rent either.
• You own (or lease) and charge someone to live there. That's rental income. A housemate who pays you $900 a month is a tenant for tax purposes, whatever you call them. If you're a renter subletting a room, the sublet rent is also income, and you can deduct the share of your rent that applies to it.

Payments for your partner's or a family member's share of household bills aren't rent if you're simply splitting real costs. But a relative paying a set monthly amount for a room is usually rent. If it's below fair market rent, the room counts as personal-use under section 280A, and deductions are limited to the rental income. You can't create a loss.

Watch for in-kind rent too. If a housemate pays with services instead of cash, such as childcare, yard work or repairs, the fair market value of those services is rental income under Pub. 527. And if the tenant pays one of your bills directly, like the electric bill, that payment is rent you received. Both are easy to miss and easy for an examiner to find through bank records. Keeping everything in a separate account makes both your return and any later questions simpler.

Expense split by square footage

Pub. 527 lets you use any reasonable method to split expenses between the rented part and your part. For a room, the most common method is square footage:

• If the tenant has exclusive use of a 200-square-foot bedroom in a 2,000-square-foot house, the rental share is 10%.
• If the tenant also shares the kitchen and living room, many people use exclusive space only, which is conservative. Some add a share of common areas, which is defensible if it's reasonable and documented.
• A count of rooms is also allowed if the rooms are about the same size.

Apply the rental percentage to shared costs: mortgage interest, property tax, insurance, utilities you pay, general repairs and HOA dues. Costs only for the room are 100% deductible. Examples include painting the bedroom, a lock, a mattress you provide, or advertising. Costs only for your space aren't deductible.

The personal share of mortgage interest and property tax stays on Schedule A if you itemize. The rental share moves to Schedule E, where it isn't subject to the SALT cap. If you take the standard deduction, that shift is pure gain.

Depreciation

The rented share of the building is residential rental property, depreciated over 27.5 years. Start with the lower of your adjusted basis or the fair market value when you begin renting, subtract land, then multiply by the rental percentage. Furniture you buy for the room is 5-year property under Pub. 946. Small items may be expensed under the de minimis safe harbor (up to $2,500 per item or invoice with an annual election, as of Oct 2026). Furniture may qualify for 100% bonus depreciation if acquired after January 19, 2025 (IR-2026-06).

Depreciation lowers your taxable rent now, but it's taxed later. When you sell, the regulations treat a room inside your dwelling as part of the residence. Your gain can qualify for the section 121 exclusion except for depreciation after May 6, 1997, which is taxed at up to 25%. On a 10% room, that's usually a small amount. Skipping depreciation doesn't avoid it: allowed-or-allowable depreciation reduces basis anyway. See depreciation recapture.

Short-term room rentals

Renting a room on Airbnb or a similar platform adds a few twists:

• The 14-day rule. Under section 280A(g), if you rent your home, including a room, for fewer than 15 days in a year, the rent isn't taxable and the rental expenses aren't deductible. A big event weekend can be tax-free income.
• Substantial services. If you provide hotel-like services, such as daily cleaning, meals or concierge help, the activity may belong on Schedule C and be subject to self-employment tax. Basic cleaning between guests and fresh linens generally don't count as substantial services.
• Average stay of 7 days or less. For passive loss rules, an activity with an average guest stay of 7 days or less isn't a "rental activity" under Treas. Reg. 1.469-1T. See the short-term rental loophole.
• Platform reporting. You may receive a Form 1099-K. Report your gross rent and deduct platform fees as expenses; don't just report the net payout.
• Local taxes. Many cities charge lodging taxes and require registration. Platforms often collect these, but not always.

Example

Illustration (made-up numbers): Frugal Fran owns a 2,000-square-foot house. She rents a 300-square-foot bedroom with a private bath to a long-term tenant for $1,000 a month. Exclusive space is 15%. Her building basis, excluding land, is $330,000.

Expenses total $6,600, so her Schedule E net rental income is $5,400. The other 85% of her interest and property tax stays personal. Lavish Larry, her neighbor, rents his whole house for 10 nights during the same festival for $6,000 and rents nothing else all year. Under the 14-day rule, he reports none of it, and he deducts none of the rental expenses. Fran tries the same thing with her spare room: 12 festival nights for $2,400. But her dwelling unit is already rented all year through the long-term room. The 14-day rule looks at rental days for the dwelling unit, not each room, so her $2,400 is taxable rental income. She can deduct that room's share of expenses for those days. The festival is fun; the rule is strict.

Reporting and records

Long-term room rent goes on Schedule E, Part I, with the property listed once. Keep:

• A floor plan or measurements showing the square footage used for the split.
• A written lease or rental agreement, even a simple one, showing rent and what's included.
• Records of rent received, such as bank deposits or app transfers. Deposits you plan to return aren't income, but last month's rent paid in advance is.
• Receipts sorted into room-only, shared and personal.
• A depreciation schedule, starting on the date the room was first available for rent.

Rental losses from a room are passive. With active participation and AGI under $100,000, up to $25,000 of losses can offset other income, phasing out by $150,000 (section 469(i)). Most room rentals show a small profit, so this rarely matters. State rules may differ.

When the room rental ends

If the tenant moves out and you take the room back, stop depreciation and the rental share of expenses on that date. If you sell later, the home generally still qualifies for the section 121 exclusion if you meet the 2-of-5-year tests, because a room inside your home isn't a separate dwelling unit. You'll owe tax on the depreciation claimed (or allowable) at up to 25%. If you convert the room into a separate unit with its own entrance and kitchen, see ADU taxes, because the sale math changes.