August 28th, 2014 by Melissa Rager
With summer drawing to a close, if you own a vacation home that you both rent out and use personally, it’s a good time to review the potential tax consequences:
Rental property. You can deduct rental expenses, including losses, subject to the real estate activity rules. You can’t deduct any interest that’s attributable to your personal use of the home, but you can take the personal portion of property tax as an itemized deduction.
Nonrental property. You can deduct rental expenses only to the extent of your rental income. Any excess can be carried forward to offset rental income in future years. You also can take an itemized deduction for the personal portion of both mortgage interest and property taxes.
Look at the use of the home year-to-date to project how it will be classified for tax purposes. Adjusting either the number of days you rent it out or your personal use between now and year end might allow the home to be classified in a more beneficial way.
Please contact your GBQ tax associate at 614.221.1120 if you have any questions.