With popular sites like Airbnb, HomeAway, and VRBO renting out your property is becoming more and more popular, especially heading into summertime. However, you need to be aware of the tax implications of renting out vacation home.
If you receive rental income for the use of a house as a vacation home, it generally requires reporting the rental income on a tax return. Here a few guidelines:
Personal Residence – When the property is your home, the rental expense deduction is limited— meaning the rental expenses cannot be more than the rent received.
Vacation Home – Whether it is a house, an apartment, condominium, mobile home, boat, vacation home, or similar property. It may be possible to use more than one unit to rent out as a residence during the year.
Personal Use – If you, your family or friends pay less than a fair rental price then this is considered personal use.
Divide Expenses – If you use your home as a residence during a tax year, make sure that you separate the expenses between personal and business.
Special Rules – If your house is rented out for less than 15 days during the year, you do not have to report the rental income. However, none of the rental expenses are deductible either
The rules concerning renting out vacation homes can be quite confusing, if you need help deciphering what to do, contact a qualified tax accountant.
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