Hi, I’m Patti, and I work for the IRS.
Do you own a vacation home you sometimes rent to others?
If so, you need to know that there are some special rules that affect how you report your rental income and expenses.
For example, if you rent out your vacation home for only a short time, fewer than 15 days a year, you may not have to report it at all.
This means that generally speaking, as long as you stay within this two-week time limit, your rental income will be tax-free.
And you won’t need to show it on your return.
And if you itemize your deductions on Schedule A, you can still claim deductions for qualified mortgage interest and property taxes you pay, as well as any eligible casualty losses.
On the other hand, if you rent your home for at least 15 days during the year, the law is very clear.
The rental income you receive is always taxable.
That means you must report it on your return using Schedule E.
However, the rules for claiming your expenses are more complicated.
Factors, such as the number of days you rent your home compared to the number of days you use it yourself, also come into play.
This affects how much you can deduct, which expenses you can claim and how you report them on your tax return.
IRS Publication 527 on rental income and expenses has a lot of information on the rules that apply to vacation homes, including a worksheet and some examples.
You can find this publication, along with other tax help materials at IRS.gov.