One of the ways to defray the costs of owning and maintaining a vacation home, is to rent it out when you are not using it. Income earned from those rentals may be reportable on your income tax return. For income tax purposes, a vacation home may include a house, apartment, condo, mobile home, boat, or similar property. In order to be considered a “home”, the vacation property must have basic living accommodations, such as sleeping space, a toilet, and cooking facilities. Read on for some helpful tips.
- Income and expenses related to renting a vacation home are reported on Schedule E of your personal income tax return.
- As long as you (or your family) also use the home, your rental expenses cannot exceed the rent you receive (meaning you cannot claim a loss.)
- Special rules must be followed when you rent out a home that you also use personally. Expenses must be allocated based on the number of days the unit is rented or available for rent, and the number of days it is used by you and your family. Any expenses that cannot be deducted on Schedule E, may be deducted on Schedule A.
- If you you rent a vacation home for less than 15 days a year, you are not required to report the rental income on your tax return. In this case, any mortgage interest or real estate taxes for the home would be deducted on Schedule A.
By: Honorine M. Campisi, Senior Tax Manager