Know the vacation home rules
Tax Tip of the Week
July 13, 2015
Know the vacation home rules
Are you making summer plans for visiting your vacation home? When you use your vacation home personally and also rent it during the year, knowing the rules can maximize tax breaks on your federal income tax return.
Here are two general guidelines to keep in mind.
- When you rent your home for 14 days or less during the year, all of the rental income is tax-free. That's true no matter how much you charge — and you're not even required to report the rent. Expenses related to the rental under this exception are generally not deductible. However, your mortgage interest and property taxes are still deductible if you itemize.
- If you rent your vacation home for more than 14 days, all of your rental income is reportable. You'll have to divide your expenses between your personal use and those of the rental. The portion of your expenses related to your personal use, such as mortgage interest and property taxes, are deductible as long as you itemize. You deduct the rental expenses against the rental income. Just remember, you generally can't claim a loss on your current-year tax return when the expenses exceed the income. Instead, you may be able to carry the excess to future years.
If you rent your vacation home when you're not using it, please give us a call. We'll help you set up a system to track your time and expenses so you get the best possible benefit.
"Tax Tips" are published weekly to provide current tax information, tax-cutting suggestions, and tax reminders. If you would like more information on anything in "Tax Tips," or if you'd like to be on our mailing list to receive other tax information from time to time, please contact our office.
The tax information contained in this site is of a general nature and should not be acted upon in your specific situation without further details and/or professional assistance.
© MC 2015
July 13, 2015
Know the vacation home rules
Are you making summer plans for visiting your vacation home? When you use your vacation home personally and also rent it during the year, knowing the rules can maximize tax breaks on your federal income tax return.
Here are two general guidelines to keep in mind.
- When you rent your home for 14 days or less during the year, all of the rental income is tax-free. That's true no matter how much you charge — and you're not even required to report the rent. Expenses related to the rental under this exception are generally not deductible. However, your mortgage interest and property taxes are still deductible if you itemize.
- If you rent your vacation home for more than 14 days, all of your rental income is reportable. You'll have to divide your expenses between your personal use and those of the rental. The portion of your expenses related to your personal use, such as mortgage interest and property taxes, are deductible as long as you itemize. You deduct the rental expenses against the rental income. Just remember, you generally can't claim a loss on your current-year tax return when the expenses exceed the income. Instead, you may be able to carry the excess to future years.
If you rent your vacation home when you're not using it, please give us a call. We'll help you set up a system to track your time and expenses so you get the best possible benefit.
"Tax Tips" are published weekly to provide current tax information, tax-cutting suggestions, and tax reminders. If you would like more information on anything in "Tax Tips," or if you'd like to be on our mailing list to receive other tax information from time to time, please contact our office.
The tax information contained in this site is of a general nature and should not be acted upon in your specific situation without further details and/or professional assistance.
