You may be renting out that mountain cabin or beach house during this vacation season. When it comes time to prepare your 2014 tax returns, don’t forget the implications of such vacation home rentals to your tax liabilities, some of which considerations are:
- Required reporting of rental income and expenses on Schedule E of your Federal tax return.
- Use by you as a “home” of the property, during non-rental periods, may cause your rental deductions to be limited in various ways.
- And “personal” use includes not only your own use of the property, but use by your family members or others who pay less than the full fair market rental value for the time spent in the property.
- A “freebie” offered by Uncle Sam can kick in when the property is rented out fewer than 15 days per year, in which case you don’t have to report the rental income at all.
Check out IRS Publication 527, “Residential Rental Property (Including Rental of Vacation Homes”) for more details.