Are you thinking of signing up with
one of those websites that link travelers to property owners with space to
spare? If you plan to offer for rent all or part of your main home,
establishing sound recordkeeping procedures from day one is a good idea.
In addition to a bookkeeping
system to track the income and expenses related to your rental, a calendar
detailing the days your home was rented will be useful at tax time. The reason?
Deductible expenses may be limited when rented property is also your personal
residence. Having a written record helps determine which tax-reporting rules
apply.
For example, say you rent your
primary home to a vacationer for 15 days or more during a year. All of the
rental income is taxable. However, expenses such as interest, property taxes,
utility costs, and depreciation are split between the time your property was
rented for a fair rental price and the days you used it personally. The portion
related to the rental is deductible up to the amount of your rental income.
What if you have rental
expenses in excess of your rental income? You may be able to carry them forward
to next year.
Different rules apply when your
home is rented for less than 15 days, and when the property you offer for rent
is your vacation home or timeshare. Please contact our office. We'll help you
plan a tax-efficient rental program.
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