| The tax law provides that if you rent | | | | handle the rental while you are gone. |
| your home for fewer than 15 days a year | | | | You or the property manager will want to |
| that the rental income is not included | | | | verify the tenant's references. You will |
| in your gross income (Section 280A(g)). | | | | also want to obtain a reasonable |
| That means that you can take a two-week | | | | security deposit.Although the rental |
| vacation, rent your home while you are | | | | income is not taxable if you rent your |
| gone, and the rental income is not | | | | home for 14 or fewer days during the |
| taxable. What a great way to pay for | | | | year, you may not claim any deductions |
| your vacation.The tax law provides that | | | | attributable to the rental activity |
| all income is included in gross income | | | | (Section 280A(g)(1)). Thus, you may not |
| and therefore taxable unless the item of | | | | deduct property management fees, |
| income is specifically excluded from | | | | repairs, cleaning, insurance, or |
| gross income. There are a number of | | | | depreciation attributable to the rental. |
| these exclusions and some are commonly | | | | You may, however, deduct the mortgage |
| known such as the fact that health | | | | interest, real estate taxes, and any |
| insurance premiums paid by your employer | | | | casualty or theft losses as itemized |
| are excluded from your gross income. | | | | deductions just as you otherwise |
| However, this exclusion for renting your | | | | could.The ability to rent your home to a |
| home out for 14 days or fewer during the | | | | tenant for up to 14 days a year and have |
| year is not as well known.If you live | | | | the rent income be tax free is one of |
| near where a major sporting event, | | | | the many tax benefits that the tax law |
| convention, or other major event is | | | | allows homeowners. If you live near a |
| taking place, you might be able to rent | | | | major sporting event or in a resort |
| your home for a large sum of money. For | | | | area, this rule allows you to generate |
| example, if you lived near where the | | | | significant tax-free income each year |
| Super Bowl or World Series was going to | | | | while enjoying a nice vacation. Just be |
| be played, you might be able to rent | | | | sure that the tenant understands that 14 |
| your home for much more than the average | | | | days is the maximum term of occupancy. |
| hotel rate in your city.If you live in a | | | | If you rent the home for a total of 15 |
| resort area, you might be able to rent | | | | or more days during the year, all of the |
| your home out during the peak tourist | | | | rent income is taxable.Alan D. Campbell |
| season when the hotels are at full | | | | is a CPA in Arkansas and Florida and is |
| occupancy. Because you may rent your | | | | self-employed primarily as an author of |
| home for a maximum of 14 days a year for | | | | tax publications. He earned a Ph.D. in |
| the income to be tax free, you want to | | | | accounting with an emphasis in taxation |
| earn the highest rental rate possible.Be | | | | from the University of North Texas. He |
| sure to check with your attorney to make | | | | is also admitted to practice before the |
| sure that there is no problem with | | | | United States Tax Court. He has |
| zoning or other legal prohibitions for | | | | published numerous articles on tax |
| renting your home for up to 14 days a | | | | topics in professional journals. He is |
| year. Local law might require that you | | | | the co-author of the book Tax Strategies |
| obtain a license or collect sales or | | | | for the Self-Employed and the revision |
| occupancy tax from the tenant. You will | | | | editor of CCH Financial and Estate |
| also want to hire a property manager to | | | | Planning Guide, 15th edition. |