How do you split expenses with personal use?

The formula in Publication 527

If you use a dwelling unit for both rental and personal purposes, Publication 527 says you divide expenses by the number of days used for each purpose. Your rental expenses will be no more than total expenses multiplied by a fraction. The numerator is the days actually rented at a fair rental price; the denominator is the total days the unit was used. Only the rental share goes on Schedule E, Part I. Some personal expenses, such as mortgage interest and real estate taxes, may still be deductible on Schedule A if you itemize.

Two counting rules decide most disputes. First, any day the unit is rented at a fair rental price is a day of rental use, even if you also used the unit that day. Second, a day the unit is available for rent but not actually rented is not a day of rental use. Empty days do not appear in the fraction at all, which surprises owners who assumed vacancies would count in their favor.

What is a fair rental price?

A fair rental price is generally what a person unrelated to you would be willing to pay. Rent substantially below similar properties in your area is not a fair price. The publication gives a checklist for comparing properties: same purpose, approximately the same size, approximately the same condition, similar furnishings and a similar location. If any answer is no, the properties are probably not similar. This matters twice, because days rented below a fair price count as personal use, not rental use.

The publication's beach cottage example

The cottage was available June 1 through August 31, which is 92 days. You could not find a renter for the first week of August, so 7 days were available but not rented and are left out. That leaves 85 days of rental use, including a 2-day July weekend you used with no refund of rent, because you received a fair rental price for those days. Your family used it for 14 days in late May. Total use is 14 + 85 = 99 days, so rental expenses are 85/99, about 86 percent, of the cottage expenses. At $12,000 of yearly expenses, that is about $10,303 rental and $1,697 personal.

Now the home test. For deciding whether you used it as a home, the 2-day weekend flips: it is personal use even though you were paid. That gives 16 days of personal use and 83 days of rental use. The limit is the greater of 14 days or 10 percent of rental days (8 days), so the threshold is 14 and 16 exceeds it. The cottage is treated as a home. Paste 85, 2 and 14 into the calculator above to reproduce both results.

Who counts as personal use?

A day of personal use is any day the unit is used by you or any other person with an interest in it, a member of your family or the family of any other owner (unless that person uses it as a main home and pays a fair rental price), anyone under an arrangement that lets you use some other dwelling, or anyone paying less than a fair rental price. Family means spouse, siblings, half siblings, ancestors and lineal descendants.

The publication's examples show how this plays out: a co-owner's two weeks counts as personal use for every owner; a son who owns no interest and pays a fair rent as his main home does not count; a house swap with Rosa counts; and an apartment rented to your mother below a fair rent counts. Two exceptions apply. Days spent working substantially full time on repairs and maintenance (not improving) are not personal use even if family members play that day. And days you used the property as your main home before or after renting it may be excluded if you rented or tried to rent it for 12 or more consecutive months, or if the rental ended because you sold it.

Used as a home: the limit on deductions

You used the unit as a home if personal use exceeds the greater of 14 days or 10 percent of the days rented at a fair price. In the publication's basement apartment example, 273 rental days make the 10 percent figure 27, and 30 days of rent-free use by brothers is more, so it counts as a home. If you used the unit as a home and rented it 15 days or more with a net profit, you deduct all rental expenses. With a net loss, Worksheet 5-1 limits the deduction: certain expenses are allowed in a fixed order and the rest carry forward to next year.

Renting a unit that is considered a home is not a passive activity, so the loss rules on rental loss limits do not apply the usual way. If you rent a home for under 15 days a year, see the 14-day rule.

Sources

• IRS Publication 527, Residential Rental Property (2025): Personal Use of Dwelling Unit (Dividing Expenses, Dwelling Unit Used as a Home, Worksheet 5-1), Renting Part of Property. Read November 2, 2026.

Edition read: Publication 527 (2025), for use in preparing 2025 returns. Dollar limits and rates in this publication are for 2025; check the current publication and form instructions for your tax year. Where a figure is described as our arithmetic, it applies the publication’s rule to a made-up example. This page summarizes the publication and does not replace it.