Vacation Homes - sometimes you don’t declare the rent!

Vacation homes are taxed under one of three sets of rules depending on how long the homeowner rents the property.

If you rent your vacation home for fewer than 15 days during the year, no rental income is includible in gross income.

If you rent the property for 15 or more days during the tax year and it is used by you for the greater of (a) more than 14 days or (b) more than 10% of the number of days during the year for which the home is rented, the rental deductions are limited. Under this limitation, the amount of the rental activity deductions may not exceed the amount by which the gross income derived from such activity exceeds the deductions otherwise allowable for the property, such as interest and taxes.

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