Is there a big event coming to your city, and you want to get out of town to escape the street closures and the visitors who’ll be invading the area? Think July 4 in Washington, D.C., New Year’s Eve in Times Square, Mardi Gras in New Orleans, Comic-Con in San Diego or next year’s Super Bowl in Miami. Remember this tax tip for renting out your home on a short-term basis: Rentals for 14 days or less in a year aren’t taxed. If you don’t mind strangers living in your house, you can leave the crowds behind while pulling in tax-free cash. The 14-day rule also plays into rental property deductions. The tax laws prohibit the deduction of rental real estate losses when the owner’s personal use of the realty exceeds the greater of 14 days/year or 10% of the days the home is rented. Personal use excludes days spent at the home for repairs and maintenance… Even when other family members are also present, as this case illustrates. A couple who lived in Alaska owned residential rental property near an Idaho resort. After the tenants moved out and left the home in poor condition, the couple restored it to make it available for short-term vacation rentals. They made frequent trips to Idaho with their kids during that time. The wife mainly worked on the home while her family went skiing and did other recreational activities. According to the Tax Court, the principal purpose of the Idaho visits was for home repairs and maintenance, so those days don’t count as personal use of the property (Rose, TC Memo. 2019-73).

Tax Free Cash

by | Jul 16, 2019 | TallyTaxMan, Tax court | 0 comments