Renting out a vacation property to others can be profitable.
If you do this, you must normally report
the rental income on your tax return. You may not have to report the rent,
however, if the rental period is short and you also use the property as your home.
Here are some tips that you should know:
You usually report rental income and rental expenses on
Schedule E, Supplemental Income and Loss. Your rental income may also be
subject to Net Investment Income Tax.
If the property is “used as a home,” your rental expense
deduction is limited. This means your deduction for rental expenses can’t be more
than the rent you received.
If you personally use your property and also rent it to
others, special rules apply. You must divide your expenses between rental use
and personal use. To figure how to divide your costs, you must compare the
number of days for each type of use with the total days of use.
Personal use may include use by your family. It may also
include use by any other property owners or their family. Use by anyone who
pays less than a fair rental price is also considered personal use.
If the property is “used as a home” and you rent it out
fewer than 15 days per year, you do not have to report the rental income. In
this case you deduct your qualified expenses on Schedule A.
Courtesy for IRS
For more information contact Neikirk, Mahoney and Smith 502-896-2999
No comments:
Post a Comment