DO YOU HAVE A VACATION HOME? If you rent a vacation home to others, you must report the income on your tax return. In most cases you can deduct the costs of renting your property. Your deduction may be limited if you also use the property as your home. If the property is “used as a home,” your rental expense deduction is limited and can’t be more than the rent you received. • Divide Expenses. If you personally use your property and also rent it to others, special rules apply. You must divide your expenses between the rental use and the personal use. To figure how to divide your costs, you must compare the number of days for each type of use with the total days of use. • Personal Use. Personal use may include use by your family. It may also include use by any other property owners or their family. Use by anyone who pays less than a fair rental price is also personal use. • Schedule A. Report deductible expenses for personal use on Schedule A, Itemized Deductions. These may include costs such as mortgage interest, property taxes and casualty losses. • Rented Less than 15 Days. If the property is “used as a home” and you rent it out fewer than 15 days per year, you do not have to report the rental income. • Schedule E. You usually report rental income and rental expenses on Schedule E, Supplemental Income and Loss. Your rental income may also be subject to Net Investment Income Tax. Personal use is a complicated issue. As always - you should call us to answer your questions and file your tax return.
Posted on: Tue, 05 Aug 2014 19:03:51 +0000
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