As you know if you have a rental property you are required to report any earnings from tenants in your properties as income. Although if you have a property that you live in most of the year, but rent for short periods you may not have to report any income earned. You may even be able to deduct the costs that you have from renting the property, but you may also be limited on you deductions if the property is also your home. If you rent out a vacation home you need to know what it will affect at tax time.
Vacation Homes – Almost any type of property can be a vacation home such as; houses, apartments, condos, mobile homes and even boats.
Schedule E – You report any earned rental income by filing a Schedule E, Supplemental Income and Loss. You may also have the Net Investment Tax applied.
You’re Own Home – If you also use the property you rent as your home the deductible costs associated with renting is lowered. Your deduction cannot exceed the total of rental income you earned.
Cost Division – There are special rules for when you both use and rent the same home. You will have to divide the expenses between what you incur from personal use and from rental use.
Personal Use – This means that the property owner and their family use the home for their own use, it may also apply to a tenant who pays less than fair market rental value.
Schedule A – You report any expenses you wish to deduct on a Schedule a, Itemized Deduction. Items such as mortgage interest, property taxes and casualty losses may be able to be deducted.
15 Day Window – If you only rented your property for 15 days or less in a year it will fall under personal use and you will not have to report the rental income.