Vacation homes

Question 1

Vacation homes

Personal use

Answer 1

Rented < 15 days

• Exclude rental income from GI
• Only permitted deductions are mortgage interest, taxes, casualty losses (Sch. A)

Question 2

Vacation homes - Mixed use

Answer 2

Rented >= 15 days AND

Used > max(14, 10% #rented)

• Allocate expenses proportionately
• Deduct exp. up to GI in order
  
  • interest/ taxes
  • maintenance and utilities
  • depreciation
• Cannot deduct loss, but may carry forward
• Report income/exp on Sch. E (hobby)

Question 3

Vacation homes - Rental

Answer 3

Rented >= 15 days AND

Used < max(14, 10% #rented)

• Allocate expenses proportionately
• Deduct exp. up to $25K
  
  • AGI Phaseout: $100K - $150K
• Report income/exp on Sch. E (hobby)