If you own a vacation home, you’ve probably considered renting it out occasionally to help offset some of the costs.
As it happens, Uncle Sam has also considered this possibility and is poised to collect some of that income depending on the number of days each year the property is rented.
First and foremost, pay attention to the 14-day rule, says Thomas A. Gorczynski, an enrolled agent in Phoenix.
The proceeds from a vacation home that is rented out 14 days or less a year are nontaxable and don’t need to be reported on your tax return no matter how much rent you charge.
To qualify, the property must be your personal residence. A dwelling is considered a personal residence if the owner’s use of the home each year exceeds the greater of 14 days or 10% of the days the home is rented to others at fair market value.
Although you can’t deduct rental expenses, you may be able to claim all or part of your mortgage interest and property taxes on Schedule A of your 1040.