Plan Ahead for Tax Time When Renting Out Residential or Vacation Property
Do you have a rental and/or vacation property and have you rented it out? There are somethings you need to consider in addition to the standard clean up and maintenance. Owners are you aware of the tax implications of residential and vacation home rentals?
Receiving money for the use of a dwelling also used as a taxpayer’s personal residence normally requires you to report the rental income on a tax return. In addition, certain expenses become deductible to reduce the total amount of rental income that's subject to tax.
- Dwelling Unit – Could be anything from a condominium, house, an apartment, mobile home, boat, vacation home or even a similar property.
- Used as a Home – A property is considered to be used as a residence if the taxpayer uses it for personal purposes during the tax year for more than 14 days or at least 10% of total days rented to someone at a fair rental price.
- Personal Use – Defined as use by owner, owner’s family, friends, and other property owners and their families. Personal use is considered anyone paying less than a fair rental price.
- Reports & Special Rules - Certain forms may be needed when reporting your rental income and rental expenses. In addition, special rules may apply if your property was rented out fewer than 15 days.
Some helpful resources are Publication 527 Rental Property (Including Rental of Vacation Homes), found on the IRS website. If you have questions, reach out to our staff to help clarify any additional questions.