Renting Vacation Home Tax Rules

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Okay, so now I found something quite useful from the Wall Street Journal.

It’s important to know that there are rules about renting out your 2nd home or vacation home.

Often people try to ignore this kind of thing, or pretend that ignorance is a blissful excuse to somehow side-step the rules.

Not the case, so don’t get caught with your pants down and owing lots of money to the tax man!

Some of the WSJ Article is quoted below:

Getty ImagesVacation homes at the Port of the Islands development in Naples, Fla.

Call, text, or email me today!

I’d seriously enjoy having the opportunity to talk to you about your planif you’re moving, or if you know someone who is considering a move, and needs some straight answers.

If you are a vacation-home landlord or thinking of becoming one, it is time to review the tax rules on rental income from second homes.

This isn’t beach reading. Apart from one simple provision, this area is among the messiest in the tax code—”worse than luxury-car depreciation and almost as bad as the alternative minimum tax,” says CPA Douglas Stives of Monmouth University in New Jersey.

First, the good news: One of the tax code’s best freebies allows homeowners who rent out their property for 14 or fewer days a year to pocket the rental income, tax-free. Often called the “Masters exemption” because it is used by homeowners near the Augusta National Golf Club, who earn as much as $20,000 during the annual tournament, this provision also is popular with people living near Super Bowl sites or national political conventions.

It’s available to anyone renting out a home, and the income doesn’t have to be reported on the owner’s tax return as long the rental period is 14 or fewer days. The taxpayer can’t take depreciation or maintenance deductions, but can deduct mortgage interest and property taxes on Schedule A.

This generous break can be taken only once a year, experts say, and it can’t be taken at all if the home is rented for longer than 14 days.

Things get much more complicated if a home is “mixed-use”—meaning the owner uses it himself and rents it out. In that case he has to count the rental days and determine what percentage they are of the total number of days the property was used. That gives the percentage of expenses such as maintenance, utilities, property taxes, mortgage interest and depreciation that are deductible from the rental income.

Consult your CPA for more specific information. To read the full article click here.

Zachary Epps, GRI, ABR, REALTOR®, Eco-Broker®, full-time RE/MAX professional,

and author of the

Boulder Real Estate and Neighborhood Guide,

The Boulder Condo Guide, and The Home Buyer’s Handbook.

Call, text, or email me today! … I’d seriously enjoy having the opportunity to talk to you about your plans if you’re moving, or if you know someone who is considering a move, and needs some straight answers.

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