<\/p>\n
Generally, if you rent a home to others, you are required to report the rental income on your Federal tax return. However, you may not need to report the income if you use the property as your home and you only rent it out for a short period of time.<\/p>\n
In many cases, you\u2019re allowed to deduct the costs of renting your property \u2014 although your tax deduction can be limited if the property is also used as your home.<\/p>\n
Here are some things you should know if you rent out a vacation home:<\/p>\n
Definition of a \u2018Vacation Home\u2019<\/strong> Schedule E (Form 1040)<\/strong> Deductible Rental Expenses<\/strong> \u2018Used as a Home\u2019<\/strong> \u2018Personal Use\u2019<\/strong> Dividing Expenses<\/strong> Schedule A (Form 1040)<\/strong> Rental Period<\/strong> If you haven\u2019t yet filed your 2013 income tax return, you can use E-file to complete your taxes online.<\/p>\n For more tax information about renting property, please refer to IRS Publication 527 (Residential Rental Property, Including Rental of Vacation Homes)<\/a>.<\/p>\n
\nA vacation home can be a house, condominium, apartment, mobile home, boat, or other dwelling unit.<\/p>\n
\nYou are typically required to report your rental income and expenses on Form 1040, Schedule E (Supplemental Income and Loss)<\/a>. Note that your rental income may also be subject to the Net Investment Income Tax<\/a>.<\/p>\n
\nThe term \u2018rental expenses\u2019 refers to the costs of renting out your property. Certain expenses may be tax-deductible<\/a>, which will reduce the amount of your rental income that is subject to tax. These expenses may include: mortgage interest, property taxes, insurance, maintenance, utilities, casualty losses, and depreciation.<\/p>\n
\nYour rental expense deduction is limited if the dwelling is also used as a home<\/em> (i.e. as your personal residence). In this case, your tax deduction cannot be greater than the amount of rent you received. You are considered to use a property as a personal residence<\/em> if you use it for personal purposes during the tax year for more than: 14 days, or 10% of the total days it\u2019s rented to others at a fair rental price \u2014 whichever is greater.<\/p>\n
\nPersonal use<\/em> may include use by your family, as well as use by any other property owners or their family. The term \u2018personal use\u2019 also includes use by anyone who pays less than a fair rental price.<\/p>\n
\nSpecial rules apply if you use the property for both<\/em> rental and personal purposes. In this case, you must divide your rental expenses between the rental use and the personal use, based on the number of days the dwelling is used for each purpose.<\/p>\n
\nDeductible expenses for personal use should be reported on Form 1040, Schedule A (Itemized Deductions)<\/a>.<\/p>\n
\nYou are not required to report your rental income if the dwelling is \u2018used as a home\u2019 and you rent it out for less than 15 days per year.<\/p>\n