Do I have to report income from renting a room in my house?

Yes. Rent you receive for a room in your home is taxable rental income and is generally reported on Schedule E of your federal return. One narrow exception: if you rent your home (or part of it) for fewer than 15 days in the entire year, that income is not reported at all.

What can I deduct when I rent out a room?

Direct expenses for the rented room (repairs to that room, furnishings for it, listing fees, screening costs) are typically fully deductible. Shared expenses like mortgage interest, insurance, utilities, and internet are deductible in proportion to the rented space, commonly based on the room's share of the home's square footage.

How do I split utilities for a rented room on my taxes?

Use a reasonable, consistent method. The most common is square footage: if the rented room is 12% of your home, deduct 12% of utilities, insurance, and similar shared costs for the rental period.

Does renting a room affect the home sale capital gains exclusion?

Renting a room within your primary residence generally does not disqualify the Section 121 exclusion for the home, though depreciation claimed after May 1997 is recaptured when you sell. Ask a tax professional about your situation.

Guides → Taxes

Taxes on Renting Out a Room in Your House

Updated July 2026 · 8 min read · Plain English, no jargon

Yes, room rent is taxable income. No, it isn't complicated, and the deductions are better than most people expect. Ten minutes here and a shoebox-free record system will keep tax season boring, in the best way.

First things first: we're a room-rental resource, not a tax advisor. This guide explains the general federal rules so you can have a smarter conversation with a tax professional about your specific situation.

The one-sentence rule

Rent you collect for a room in your home is taxable rental income, generally reported on Schedule E, and you may deduct the expenses of producing it, both the direct costs of the room and a fair share of house-wide costs.

The 15-day exception: if you rent out part of your home for fewer than 15 days in the whole year, the IRS doesn't want to hear about it. No reporting, no tax, and no deductions either.

What counts as income

Monthly rent payments (cash, check, Zelle, Venmo, rent-collection apps, all of it).
Non-refundable fees you keep: cleaning fees, pet fees, early-termination fees.
Utilities or services the renter reimburses you for (you deduct the matching expense, so it usually nets out).
Security deposits are not income while you hold them, only any portion you keep at move-out.

What you can deduct

Fully deductible (direct expenses of the room)

Furnishing the rented room: bed, dresser, desk, lamps, linens.
Repairs and painting for that room.
Listing fees, tenant screening costs, lease templates.
Landlord or home-share insurance riders tied to the rental.

Partially deductible (shared house-wide costs)

Deduct these in proportion to the rented space, most commonly the room's share of your home's square footage, for the months it was rented:

Mortgage interest and property taxes (the rental share moves to Schedule E; the rest stays where it usually goes).
Homeowners insurance, utilities, internet, trash, HOA dues.
House-wide repairs (a new water heater serves the renter too).
Depreciation on the rented portion of the home.

Worked example: Karen rents a 150 sq ft bedroom in her 1,500 sq ft house (10%) for all 12 months at $900/month.

Income: $10,800.
Direct costs: $600 furniture + $90 screening + $50 lease template = $740.
Shared costs: $14,000 of interest, taxes, insurance, and utilities × 10% = $1,400. Plus depreciation on 10% of the building.

Taxable rental income lands around $8,000–$8,600 rather than $10,800, and Karen's records took about 15 minutes a month to keep.

Records to keep from day one

Separate the money. Collect rent through a dedicated account or a rent-collection app rather than mixing it with personal Venmo. Clean trails make Schedule E a 20-minute job.
Save every receipt for the room: furniture, repairs, screening. A phone photo into one folder is plenty.
Note your method. Write down the square-footage percentage and rental dates once; use them consistently.
Keep the lease. It documents dates, rent, and what's included, exactly what your tax preparer wants to see.

Our recommended rent collection and banking tools keep rental income and expenses automatically separated and produce year-end summaries, which is most of the battle.

Common questions

Will renting a room hurt me when I sell my house?

Generally no. Renting a room within your primary residence typically doesn't disqualify the home-sale capital gains exclusion, though depreciation you claim gets recaptured at sale. Worth a 10-minute conversation with a CPA.

What about state taxes?

Most states tax rental income like other income. A few cities require registering room rentals or collecting local taxes for shorter stays; monthly (28+ day) rentals usually avoid hotel-style taxes, one more reason we favor them.

Is it still worth it after taxes?

Almost always. Even taxed as ordinary income with conservative deductions, a $900/month room typically nets $7,000+ a year. Price yours with the room rent calculator and see.

Get the Free Spare-Room Starter Kit

Pricing worksheet, screening checklist, lease template, and our record-keeping starter sheet.

Send Me the Free Kit →

This guide is general information, not tax or legal advice. Some links are partner referrals; if you sign up through them we may earn a commission at no extra cost to you.