{"id":2488,"date":"2022-09-21T10:00:00","date_gmt":"2022-09-21T14:00:00","guid":{"rendered":"https:\/\/www.deeds.com\/articles\/?p=2488"},"modified":"2024-04-25T23:18:13","modified_gmt":"2024-04-26T03:18:13","slug":"i-rented-out-my-vacation-home-for-a-week-must-i-report-it","status":"publish","type":"post","link":"https:\/\/www.deeds.com\/articles\/i-rented-out-my-vacation-home-for-a-week-must-i-report-it\/","title":{"rendered":"I Rented Out My Vacation Home for a Week. Must I Report It?"},"content":{"rendered":"\n
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What Is the \u201cMinimal Rental Use\u201d Rule?<\/figcaption><\/figure>\n\n\n\n

If you own a vacation home and only rent it to guests every blue moon, you might wonder: Do I need to report this on my federal income tax returns?<\/p>\n\n\n\n

The first thing to know is this. A vacation house, cottage, apartment, mobile home, condo, or boathouse used partially for renting out and partially for personal enjoyment is deemed a mixed-use<\/em> vacation property. Here’s how mixed uses break down at tax time.<\/p>\n\n\n\n\n\n\n\n

Here\u2019s When the IRS Sees a Vacation Home as a Personal Residence<\/h2>\n\n\n\n

Like many owners of vacation homes, maybe you use yours more since Covid-19 began. What used to be a rental property has morphed into a personal residence.<\/p>\n\n\n\n

If you took in no rental income all year, the IRS considers your vacation home a personal residence.<\/p>\n\n\n\n

Same goes for a vacation home you rented out for fewer than 15 days during the year, and lived in for more than 14 days. You don’t need to report any rental income on your federal income tax return. It\u2019s taxed as a personal residence.<\/p>\n\n\n\n

The Internal Revenue Service calls this its Minimal Rental Use rule, <\/strong>explaining<\/strong><\/a>:<\/strong><\/p>\n\n\n\n

There’s a special rule if you use a dwelling unit as a residence and rent it for fewer than 15 days. In this case, don’t report any of the rental income and don’t deduct any expenses as rental expenses.<\/em><\/strong><\/p>\n\n\n\n

To put a finer point on it, a vacation home is deemed a personal residence if you and\/or your friends or family hung out there for 14 days or <\/em>10% of the days you rented the home out at fair market rates \u2014 whichever of those two numbers of days is higher.<\/p>\n\n\n\n

(Don\u2019t count the days no one stayed in it or days you simply worked on it.)<\/p>\n\n\n\n

So, then, does your (and your family and friends\u2019) use of your vacation home add up to the greater of either 14 days, or 10% of the rental days? If so, then it\u2019s taxed as a personal residence. See how the IRS lays out the taxation formula for renting residential and vacation property<\/a>.<\/p>\n\n\n\n

If the home counts as a personal residence, you may, as with your first home, deduct mortgage interest and property taxes on your personal tax return. You may deduct your rental-use expenses on Schedule E (\u201cSupplemental Income and Loss\u201d). You may only deductup to the amount of your gross rental income (that\u2019s rental income minus marketing costs and real estate agents\u2019 commissions).<\/p>\n\n\n\n

Remember:<\/em><\/strong> If the home counts as a personal residence, you can\u2019t deduct expenses involving the days it was rented (association fees, utilities, maintenance, marketing, etc.).<\/p>\n\n\n\n

Here\u2019s When the IRS Sees a Vacation Home as a Rental Property<\/h2>\n\n\n\n
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You\u2019ll need to declare \u201crental income\u201d when you have rented the property more than 14 days of the year. You must report your rental income from the vacation property on your tax return \u2014 specifically on Schedule E.<\/p>\n\n\n\n

It goes like this. You rent out your vacation property, for market value, for 14 days out of the year or more. And you or your buddies or family are there for no more than 14 days or<\/em> no more than 10% of the days you rent the home out to outside guests at fair market rates \u2014 whichever adds up to the larger number. Days you were there to work on the house don\u2019t count in these figures. Vacancy days don\u2019t count, either.<\/p>\n\n\n\n

If this is your situation, the IRS applies rental property tax rules to your vacation home.<\/p>\n\n\n\n

This means you may claim the applicable tax breaks on your mortgage interest, insurance premiums, and property taxes. As the IRS explains:<\/p>\n\n\n\n

These expenses, which may include mortgage interest, real estate taxes, casualty losses, maintenance, utilities, insurance, and depreciation, will reduce the amount of rental income that’s subject to tax. <\/em><\/p>\n\n\n\n

How do you allocate expenses between one use and the other? Imagine that in 2022, you (or family and friends) enjoyed your vacation cottage a total of 100 days. You rented it out at market value for 200 days. Your expense ratio is:<\/p>\n\n\n\n