If you have a short-term vacation rental, you may be bringing in some extra income this summer season. By following a few easy tips, you can reduce your income taxes and keep more of what you make (some of which might go into a savings account for a vacation of your own!). Here are some helpful tips that short-term rental owners should consider:
• You don’t have to pay income tax on what you earn from your short-term rental, but only if you don’t rent it out for more than 14 days throughout the year, and also, if you live in it as your primary residence for at least 14 days out of the year.
• Keep thorough records as well as separate business and personal expenses. You may be able to deduct all ordinary and necessary expenses to operate the rental home.
• If you rent out a room in your home rather than the entire property, you may still be able to deduct a portion of the mortgage interest and property taxes of the property. But you still need to delineate between personal and business use of the residence.
Renting out an extra property or an extra space in your house is a great way to make some extra cash, and the tax laws may work in your favor.
* This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax professional.
Tip adapted from TurboTax