Renting A Vacation Home

A vacation home is not just a single family house. Vacation homes also include apartments, condominiums, mobile homes or boats. If you own a vacation home that you rent to others, you generally must report the rental income on your federal income tax return.

In most cases, you can deduct expenses of renting your property. Your deduction may be limited if you also use the home as a residence.

Here is some general information about vacation home rental income.

  • You usually report rental income and deductible rental expenses on Schedule E, Supplemental Income and Loss. You may also be subject to paying Net Investment Income Tax on your rental income. This 3.8% tax became effective January 1, 2013.
  • If you personally use your property and sometimes rent it to others, special rules apply. You must divide your expenses between the rental use and the personal use. The number of days used for each purpose determines how to divide your costs.
  • Report deductible expenses for personal use on Schedule A, Itemized Deductions. These may include costs such as mortgage interest, property taxes and casualty losses.
  • If the property is “used as a home,” your rental expense deduction is limited. This means your deduction for rental expenses can’t be more than the rent you received.
  • If the property is “used as a home” and you rent it out fewer than 15 days per year, you do not have to report the rental income.

 

IRS Circular 230 Disclosure

Pursuant to IRS Regulations, we inform you that any tax advice provided or implied on this post (including attachments) is not intended or written to be used, and cannot be used, for the purpose of avoiding penalties that may be imposed on the taxpayer.

While the information contained in this post is believed to be reliable, we cannot guarantee its accuracy or completeness.