<prompt> Human: I am in the process of buying my first house and I am going to be having a friend as a roommate that will probably end up paying about 450 a month in rent plus some utilities. My mortgage plus tax and insurance will come to about 1250 a month. My question is if the money paid to me in rent will be taxable income or not also if I could offset that by just deducting an equivalent portion of my mortgage and other costs as a business expense?  <response>: Yes it is taxable.You can potentially deduct portions of the expenses you incur. The IRS details the rules of this situation in Publication 527: 