Podcast: Vacation Home Rental

Vacation Home Rental

Written by Jeff Dvorachek

April 22, 2021

As we start to open back up this spring and summer, it is a good time to talk about your vacation home rental. It was a bad year for travel in 2020, so I am sure there will be a lot of activity this summer.

In the old days, rental of your personal residence was mainly done for properties on a nice lake, a warm climate, or a resort area. Now with Airbnb people everywhere are renting out their homes. These rentals can last hours, days or weeks.

So today we are not talking about long-term rentals – we are talking short-term rentals – right?

  • Yes, this would typically be rentals of your personal residence or vacation homes.

When is a home considered to be a personal residence or vacation home rental?

  • Used personally for the greater of 14 days or 10% of the total rented days.
  • If you rent it for 200 days, then you can use it for 20 days before it is considered to be a personal residence or vacation home rental.
  • If a personal residence or vacation home, then expenses have to be allocated based on days rented.

How are rented days calculated?

  • Rented at fair market value
  • Not used by family members or anyone else for free

How many days can you rent your home for income?

  • As many as you want.
  • If it is less than 15 days did not know that you do not need to claim the income?
  • If you rent it for 15 days or more you need to claim the income on your return.

What kind of expenses can be taken?

  • Ordinary and necessary expenses
  • Improvements
  • Depreciation
  • Prorated based on rental days vs personal days.
    • Empty days and days there to repair property does not count.
    • Used 30 days- rented 60 days = 66% deduction

These types of rental can actually be more complex than a person might think, so it is a good idea to talk to a tax professional to make sure you are doing it right.

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Jeff Dvorachek
I joined Hawkins Ash CPAs in 1998. I am the partner-in-charge of the Manitowoc, WI, office and tax director for the firm. I have thorough experience providing tax services to individuals, commercial businesses, nonprofit entities and estates and trusts. I also provide compilation and review services. I lead the Tax Committee and am a member of the Information Technology Advisory Committee.

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