Do you own a vacation home near annual events where rents soar for short periods, like spring break?
The IRS says you can rent out your home, pocket the rent checks, and sidestep taxes on the rental income.
- 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.
source www.accountingweb.com/tax/individuals/income-tax-reminders-for-owners-of-vacation-homes