According to a new tip from IRS.gov, if you rent your vacation home for less than fifteen days, you may not have to report it at all. This means, generally, that if you rent your home for 2 weeks per year or less, your rental income is tax free and you won’t need to show it on your return.
The IRS also reports that if you itemize deductions on Schedule A, you may be able to claim qualified mortgage interest, property taxes you pay, and eligible casualty losses.
Alternatively, renting your vacation property for fifteen days or more per year, the rental income you receive is always taxable and must be reported on your return using Schedule E. Claiming your expenses also becomes more complicated with many factors requiring consideration such as the number of days your rent versus the number you use the property yourself. The comparison of days rented versus days used by the owner effects which expenses they can claim, what they can deduct, and how they can be reported.
IRS Publication 527 reviews rental income and expenses, how to report them on your return, depreciation, casualty losses on rental property, and passive activity and at-risk rules.
Did you know that McCauley Law Offices, P.C. can help you with your tax planning needs? Contact us today to regarding all of your tax needs. When the IRS comes knocking, let our knowledgeable attorneys and staff answer.