Renting out rooms in my home, what's the proper way to deal with utilities for tax purposes?
It's the same result either way.  Say the bills are $600, and you are reimbursed $400. You'd be able to write off $400 as part of the utilities that are common expenses, but then claim the $400 as income.  I'd stick with that, and have contemporaneous records supporting all cash flow. You also can take 2/3 of any other maintenance costs that most homeowners can't. Like snow removal, lawn care, etc.
The general rule is: Generally, in order to claim a business deduction for your home, you must use part of your home exclusively and regularly: Exclusively seems to be the toughest standard and I do not know exactly how strict the IRS's interpretation is. Working in your living room where you regularly watch TV and have people over on the weekends would seem to fail that test. A separate room with your computer in it would pass it. If it was your only computer and you regularly played online games with it, that would seem to be a grey area.  The IRA booklet covering this area is here http://www.irs.gov/pub/irs-pdf/p587.pdf I know people that have rented rooms in other places or made use of rental offices for this purpose. "I would not classify utilities (including electric) as additional fees.  In many cases you interact directly with the utility (not the landlord) and pay for what you use.  There are exceptions like when renting a room. The renter's insurance also is not part of the landlord's profit, it is simply there to protect you.  In the case of loss, the landlord cannot insure your property. You have to provide your own insurance.  Its pretty low costs, typically less than 20 per month. The application fee is typical.   The move in fee is something that could be negotiated away and sounds pretty sketchy.   You can always ""let your fingers do the walking"" and find out the fees before you look at the place." After looking at your profile, I see your age...28.  Still a baby.  At your age, and given your profession, there really is no need to build investment income.  You are still working and should be working for many years.  If I was you, I'd be looking to do a few different things: Eliminating debt reduces risk, and also reduces the need for future income.   Saving for, and purchasing a home essentially freezes rent increases.  If home prices double in your area, in theory, so should rent prices.  If you own a home you might see some increases in taxes and insurance rates, but they are minor in comparison.  This also reduces the need for future income. Owning real estate is a great way to build residual income, however, there is a lot of risk and even if you employ a management company there is a lot more hands on work and risk. Easier then that you can build an after tax investment portfolio.  You can start off with mutual funds for diversification purposes and only after you have built a sizable portfolio should (if ever) make the transition to individual stocks. Some people might suggest DRIPs, but given the rate at which you are investing I would suggest the pain of such accounts is more hassle then it is worth. "You're making $100k together per year: you're not in the donut hole, you're in the top 25% of all households, and the top 10% of non-family households (as yours would be).  To be blunt, you're not in the ""rely on assistance"" area: you're in the ""save up for your downpayment"" sector. My suggestion would be to figure out a way to save more than $200-$400 a month for now.  $100k gross income means you have about $8k net income per month; $2k for rent and other necessities means you have $6k per month that you can potentially save.  Even half of that - $3k per month - means you have $24000 saved by the end of this year, and $36000 on an annual basis. As far as marriage or domestic partnership - I wouldn't get into one based on whether it helps you afford a home.  It might be a good idea because it helps you handle some of the details arising when you have joint property, perhaps, but not solely for the financial aspect. And as far as how much home is realistic?  $250k is certainly realistic if you can save up enough for a good down payment.  Try to get to the 20-25% range.  If you're already halfway there, another year of renting won't kill you, and it will mean no PMI and much better rates.   Also consider a 15 year mortgage; we're in the same general income category as you and manage a 15 year on a $250k range house quite nicely.  It doesn't add all that much to your monthly payment amount, compared to what you'd expect - particularly since the monthly payment includes property taxes which won't increase based on the length of the mortgage. Now that we have actual numbers from the OP: So, without cutting anything, you have $2k yourself you can be saving.  (This assumes your rent number of $1345 is your portion of rent, and not the 100% amount.)  That's $24000 per year, just by yourself.  On top of that, you've got another $40k or so coming from your partner, at least some of which should be available as well if he/she is going to be co-owning?  But if not, at least you have about $2000 a month you can be saving.  You could also downsize the car, cut cable TV, downsize the phone, and have another $500 or so available - but it doesn't really look like you need to do that, given how much you have available now. I'd look at what you're doing with that ~$2000 per month right now, and see how you can free most of it up.  You haven't mentioned a few things like utilities, not sure if that's just forgetfulness or if your partner is paying them; so perhaps not all of it is available.  But - even $1000 a month is $12000 to add to the $20000 you have now, which makes a big dent in that down payment." You may have to ask each tenant to provide copies of bank statements or copied of deposited checks indicating what was paid, to whom and when. Using a spreadsheet is a good idea. It doesn't have to be complicated. If everyone co-operates then this exercise might not be too much of a hassle. But if anyone is combative or unwilling to produce these records, I would recommend reminding them that their other choice is to take each other to court where these records would be required anyway - or face eviction if the landlord doesn't get paid. Just set up a budget. Indicate how much money comes in, how much goes out to must pay expenses (lodging, food, gas, heat, cooling, etc), and determine how much is leftover for anything else you want. If that amount is ok, then you're fine. If not, something needs adjusting. "I pay taxes on revenue.  You do have the ability to deduct expenses, though it's not as comprehensive as what companies can do: These figures apply to everybody, so those that earn more get taxed more on thee additional income in each bracket (meaning the first $100,000 of taxable income is taxed the same for everybody at one rate, the next $100,000 at a different rate, etc.) So you do get to deduct personal expenses and get taxed on ""profit"" - but since the vast majority of people don't keep detailed records of what they spend, it's much simpler just to use blanket deduction amounts for everyone. Companies have much more detailed systems in place to track and categorize expenses, so it's easier to just tax on net profit. Plus, the corporate tax rate is much higher than the average individual tax rate - would you trade more deductions for a higher tax rate?" "The value of getting into the landlord business -- or any other business -- depends on circumstances at the time. How much will it cost you to buy the property? How much can you reasonably expect to collect in rent? How easy or difficult is it to find a tenant? Etc. I owned a rental property for about ten years and I lost a bundle of money on it. Things people often don't consider when calculating likely rental income are: There will be times when you have no tenant. Someone moves out and you don't always find a new tenant right away. Maintenance. There's always something that the tenant expects you to fix. Tenants aren't likely to take as good a care of the property as someone who owned it would. And while a homeowner might fix little things himself, like a broken light switch or doorknob, the tenant expects the landlord to fix such things. If you live nearby and have the time and ability to do minor maintenance, this may be no big deal. If you have to call a professional, this can get very expensive very quickly. Like for example, I once had a tenant complain that the water heater wasn't working. I called a plumber. He found that the knob on the water heater was set to ""low"". So he turned it up. He charged me, I think it was $200. I can't really complain about the charge. He had to drive to the property, figure out that that was all the problem was, turn the knob, and then verify that that really solved the problem. Tenants don't always pay the rent on time, or at all. I had several tenants who apparently saw the rent as something optional, to be paid if they had money left over that they couldn't think of anything better to do with. You may get bad tenants who destroy the place. I had one tenant who did $10,000 worth of damage. That include six inches deep of trash all over the house that had to be cleared out, rotting food all over, excrement smeared on walls, holes in the walls, and many things broken. I thought it was disgusting just to have to go in to clean it up, I can't imagine living like that, but whatever. Depending on the laws in your area, it may be very difficult to kick out a bad tenant. In my case, I had to evict two tenants, and it took about three months each time to go through the legal process. On the slip side, the big advantage to owning real estate is that once you pay it off, you own it and can continue to collect rent. And as most currencies in the world are subject to inflation, the rent you can charge will normally go up while your mortgage payments are constant."