By Roger Chartier

United States of America IRS Tax Information

When Roger has some spare time, he posts here. Good articles!


Rent your vacation home -
pay tax or no tax?

home for rent -

Your federal income tax return usually should show what money you got from a rental on a vacation home, boat, condo, a mobile home or an apartment.

There is a glitch in that if you rent it only for a short time each year you don't have to show that income on your taxes.

Aha! The Rule that Covers the Limited Rental Use

As long as you normally live there and end up renting the place for less than 15 days within the year you are covered by the law so that you do not have to report the income.

You do report regularly deductible personal expenses on a Schedule A in the Itemized Deductions section. This would be for stuff like casualty losses, property taxes, qualified mortgage interest.

How it is limited

You can't deduct the rental part of a vacation home's expenses so that it is more than the income for rental. You divide the expenses as your expenses and the rental expenses can be deducted up to the amount of rental income, and there it ends.

The determination of whether a property is used as a residence is by determining if you use it for more than 10% of the total days it is rented or 14 days if either amount of time is greater.

To demonstrate this think that if you rent your home for 180 days a year and live in it 19 days it is considered to be used as your residence and you can't deduct more than the rental income as an expense.

Schedule E - Supplemental Income and Loss

If or when your rental income and certain rental expenses are deducted, you would normally report it using this file.

You can read all of the details here on Publication 527 put out by the IRS.

It is a 32 page document so you might want to read it online or print it for later use it's up to you.

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