Being in the “Sierra Foothills,” it’s nice to share information like this. Owners of vacation homes, or those thinking of renting out their second homes as vacation rentals, must know the tax rules on rental income from second homes.
One of the best tax code’s freebies allows homeowners who rent their property for 14 or fewer days a year for rental income, tax-free. 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 as 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.
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.
For more information about the tax rules of renting out a vacation home, please contact us or read more in this article: http://on.car.org/Rm8SdY