Discussion:Vacation Home Rules
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Discussion Forum Index --> Advanced Tax Questions --> Vacation Home Rules
Discussion Forum Index --> Tax Questions --> Vacation Home Rules
| 2 April 2009 | |
| Here's the scenario:
Taxpayer has a vacation home (Tahoe) that has been solely personal use to date. In 2008, they decided to start using it as a rental and as of Oct 1, the property was prepped to be rented and was listed with a rental agency. There were no renters thru 12/31/08. From 10/1/08 to 12/31/08, the taxpayer used the home for 2 days. For vacation home personal-use rules, do we have to look only at 10/1-12/31, or do I have to be concerned with the entire year? | |
| 2 April 2009 | |
| Look at Publication 527, Property changed to rental use. I believe this will answer your question. | |
| 2 April 2009 | |
| Thanks for the response, but it doesn't address the specific issue. The question is not whether to depreciate it for the whole year or deduct expenses prior to 10/1, but only whether personal use during the period 1/1-9/30 needs to be considered.
Logic says no, but logic & taxes don't always mix well. | |
| 2 April 2009 | |
| It wasn't rented for more than 14 days, so don't do anything with it. No deductions or income is required to be reported for "vacation" homes (dwellings units used as a home) rented fewer than 15 days. See pub 527, p.22 for the exception for minimal rental use. | |
| 2 April 2009 | |
| When property is changed to rental use, you don't need to address the personal use period. It became a rental when it changed from personal to rental on 10/1. | |
| 2 April 2009 | |
| They are considering the unit as a vacation home (personal use being > 10% of rental usage or personal use of 15 days or more) so the personal use is still accounted for and since it was not rented for 15 days or more, no inclusion of income or operating deductions is necessary. Deduct mortgage interest and real estate taxes on sch A. Read Pub 527, for a better understanding. | |
| 2 April 2009 | |
| If the home is considered bona-fide rental- no personal usage - then depreciate it from 10/1 since it was available for rent, but if it is intended to be a vacation home, personal usage being greater than 10% of rental usage at FMV or 15 days, then no depreciation for 2008 or expenses allowed.
The question was "For vacation home personal-use rules, do we have to look only at 10/1-12/31, or do I have to be concerned with the entire year?" | |
| 3 April 2009 | |
| The property changes its intended use on 10/1 and so if the property is rented from 10/1 through 12/31 with no personal use it is rental property and depreciation can be claimed beginning 10/1 as well as the deductions taken for 10/1 through 12/31. You don't need count the period before 10/1. However, you still need to count any personal days used from 10/1 through 12/31 to see if greater than 10% at FMV or 15 days to know if you can take the expenses (see Dnc0716 comment above). However, the property wasn't rented and it was used by taxpayers for 2 days and therefore I agree with Dnc0716 comment above. | |
