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