A vacation home gives you and your family a place to relax and spend quality time together. It also puts extra money in your pocket when you rent it out. We’re not just talking about rental income. There are also tax breaks that come along with owning rental property.

According to the IRS, a vacation home is a house, apartment, condo, mobile home, boat or similar property. Keep in mind that if your rental is used as your own home and you rent it out fewer than 15 days a year, there’s no need to report that income.

How much can I deduct?   

  • If you live in this house and use it as your own home, the deduction for rental expenses cannot be more than the total rent you received this year.
  • If you live there and rent it to others, divide your expenses between rental use and personal use. Compare the number of days for each type with the total days of use.
  • If a family member, any other property owners or their family, or anyone who pays less than fair rental price lives there, report deductible expenses for personal use. 

Which expenses are deductible?

You generally deduct your rental expenses in the year you pay them, so make sure to keep a detailed record of your spending. Deductible expenses include:   

  • Advertising
  • Auto/Travel Expenses
  • Depreciation
  • Insurance
  • Mortgage Interest
  • Rental Payments
  • Repairs
  • Utilities
  • See entire list on Publication 527      
 

What forms will I need?   

  • Schedule E -Supplemental Income and Loss – Report rental property expenses and rental income here.  
  • Schedule A - Itemized Deductions – Report deductible expenses for personal use here. These may include costs such as mortgage interest, property taxes and casualty losses.  

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