4Thought Blog

4_thought_blog_graphic-red_border_-_sides_only.jpg

Vacation Rental Homeowners: The Tax and Deduction Rules (Video)

Posted by IRS on Thu, May 24, 2018

vacation home rental tax tipsDuring the summer, taxpayers often rent out their property. They usually think about things such as cleanup and maintenance, but owners also need to be aware of the tax implications of residential and vacation home rentals.

If taxpayers receive money for the use of a house that’s also used as a taxpayer’s personal residence, it generally requires reporting the rental income on a tax return.

Watch this IRS video for the tax rules you need to be aware of or read more below:

 

  • Vacation Home: This may be a house, an apartment, condominium, mobile home, boat, vacation home or similar property. It's possible to use more than one unit as a residence during the year.
  • Used as a Home: When the property is used as a home, the rental expense deduction is limited. This means the rental expenses cannot be more than the rent received.
  • Personal Use: Personal use means use by the owner, owner’s family, friends, other property owners and their families. Personal use includes anyone paying less than a fair rental price.
  • Divide Expenses: Generally, special rules apply to the rental expenses of a property used by the taxpayer as a residence during the taxable year. Usually, rental income must be reported in full, and any expenses need to be divided between personal and business purposes. 
  • How to Report: Taxpayers use Schedule E to report rental income and rental expenses. Rental income may also be subject to Net Investment Income Tax
  • Special Rules: If the home unit is rented out fewer than 15 days during the year, none of the rental income is reportable and none of the rental expenses are deductible. 

READ MORE: Are You an Airbnb or VRBO Landlord? What You Need to Know for Tax Time

Looking for personalized tax advice for your vacation rental property? Contact us for more information.

Topics: Individual tax planning

Concannon Miller’s unique, holistic and intimate approach to financial health sets us apart from smaller CPA firms with more limited resources as well as mega firms where mid-sized clients struggle for attention. Contact us here to talk about improving your business.

This communication is designed to provide accurate and authoritative information in regard to the subject matter covered at the time it was published. However, the general information herein is not intended to be nor should it be treated as tax, legal, or accounting advice. Additional issues could exist that would affect the tax treatment of a specific transaction and, therefore, taxpayers should seek advice from an independent tax advisor based on their particular circumstances before acting on any information presented. This information is not intended to be nor can it be used by any taxpayer for the purposes of avoiding tax penalties.

Subscribe for more Timely Tips for Businesses

Recent Posts