Vacation Home Rental
CAUTION: Special Rules Apply to Short-term Rentals
When a taxpayer rents property for a short period, special (and sometimes complex) taxation rules come into play, which may force the rental income and expenses to be reported on Schedule C (as opposed to Schedule E). Short-term rental situations also occur where taxpayers will rent their first or second homes using rental agents or online rental services, such as Airbnb, VRBO and HomeAway, that match property owners with prospective renters. Short-term rentals are covered in the Rental Activities chapter on page 3.17.04.
CAUTION: Renting to Relative
The days when rented to a relative at less than fair market rent are treated as personal use days and result in some very unfavorable tax treatment. See Rental Activities chapter on page 3.17.06.
Section 280A limits property expense deductions for taxpayers who rent out their home part of the year and also use the same property for their own use. The rules apply to “dwelling units” including homes, apartments, condos, mobile homes, boats, motor homes, etc. For the same year that the rental of a dwelling unit is subject to the limits imposed by Sec. 280A, it is not subject to the Sec 469 loss limitation rules.