Sole use dwellings: If you own a vacation home that only you use, your tax situation is pretty straightforward.
Rental dwellings: If you rent a dwelling to a tenant who lives there exclusively, you’re also in good shape.
Dual use: When you use the dwelling for both personal and rental use, you create the possibility of tax-free rent, rental property deductions, and extra personal residence deductions. That’s good.
But, (and it’s a big but), you really need to know the IRS rules that govern dual use of the dwelling, or you can get into hot water fast. These rules are complex and it’s important to understand them.
Want to learn how to come out a winner and stay out of the IRS’s gun sights? Read my new article titled Tax Tips: Personal Use of Your Rental Triggers Ugly Vacation- Home Rules.
Here’s just some of what you’ll learn
when you read the full article
- How the IRS defines a “vacation home”
- How the IRS defines a “dwelling”
- How to determine if your dwelling is a personal residence or a rental
- The positive benefits of dual use if you handle things correctly
- Why personal use of your rental property can be so dangerous
- Why charitable donations of your vacation home create double trouble for you (personal use and no tax deduction)
- How certain relatives can rent at fair rent but create dreaded personal use
- Why IRS defined repair days don’t produce personal use
- Why you may be happy-happy if you rent for fewer or more than fifteen days
As you can see, mixing personal use with rental use is a complicated subject. But don’t worry. We’ll explain everything in easy-to-understand language when you read the full article.