Tax Rules for Vacation Homes

Vacation homes have separate tax rules that vary according to the owner's personal-use days. A residence is a vacationhome if the owner used it more than 14 days or 10% of the days it was rented during the year (if rented more than 140 days). For a vacation home, all mortgage interest and property taxes are usually deductible, either as rent expenses or as additional itemized deductions. If there was rent income, other property expenses may be deductible, including depreciation, but only up to the amount of the rental income (losses are not allowed).

For non-vacationrental homes, you may claim rent expense deductions other than interest and taxes, even if it results in a loss. When personal use of a vacation home is involved, deductions are determined by allocating expenses, including interest and taxes, between the rental and personal-use periods. If you rent your vacaton home (or principal residence) for 14 days or less than a year, you do not have to pay taxes on that rent income.

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Roberta Williams-Lock

Principal Broker
PO Box 80883
Portland OR, 97280