- Just make sure to rent out your home or condo for less than 15 days during the year, and you don’t have to declare any of the income you receive.
- But go beyond the less-than-15-days limit and all the rental income becomes reportable on Form 1040’s Schedule E.
Congress curtails a different break for vacation-home owners.
The law allows individuals who sell their principal residence (year-round home) to escape taxes on a profit of as much as $500,000 for married persons filing jointly and $250,000 for single persons and married persons filing separate returns.
- To qualify for the exclusion, they must own and use the dwelling as a principal residence for at least two years out of the five-year period that ends on the sale date.
- Prior law allowed them to claim an exclusion, then occupy a vacation dwelling for two years and qualify for another exclusion.