Renting Your
Vacation Home
Understanding The Rules for Deductible Expenses
If you receive rental income from renting your
vacation home to others, you may deduct certain expenses. These expenses,
which may include interest, taxes, casualty losses, maintenance,
utilities, insurance, and depreciation, will reduce the amount of rental
income that is taxed.
The amount of your deductible expenses depends on how many days you
personally use the vacation home. If you are renting to make a profit and
do not use the dwelling as a home, your deductible rental expenses can be
more than your gross rental income, subject to certain limits. However, if
you rent a dwelling that you also use as a home, your deductible rental
expenses will be limited.
You are considered to use a dwelling as a home if you use it for personal
purposes during the tax year for more than the greater of 14 days or 10
percent of the total days it is rented to others at a fair rental price.
If you use the dwelling for both rental and personal purposes, you
generally must divide your total expenses between the rental use and the
personal use based on the number of days used for each purpose. However,
you will not be able to deduct your rental expense in excess of your gross
rental income.
If you use a dwelling as a home and rent it for fewer than
15 days, you are not required to report any of the rental income and are
not allowed to deduct any expenses as rental expenses. If you itemize your
deductions, mortgage interest and real estate taxes are deductible
regardless of the rental use.
