If you are thinking about renting out your vacation home for extra income (or conversely, using your rental property for personal use), here are some tax tips to keep in mind.

First and foremost, be aware that the number of days you (or family members and certain others) use your vacation home will be treated by the IRS as "personal use" which can adversely affect tax benefits. The IRS uses a fourteen-day-or-ten-percent test, meaning if you stay in the home more than 14 days or 10% of the total days it's rented in a calendar year (whichever is greater), the deductiblity of related expenses will be limited to the amount of rental income. This could result in a huge loss of tax benefits if for example, your total expenses greatly exceed total rental income in a particular year (net loss). You would be unable to offset this net loss against other qualified income. So.... make sure you don't lose what might be a significant tax benefit by simply losing track of the number of "personal use" days.

If you plan to use your vacation home often, there is a "less-than-fifteen" day exception you may want to keep in mind (and verify with your tax advisor). If you rent out your vacation home for less than 15 days during the taxable year, the income may be yours, tax-free and you don't have to report it on your return. Just be aware that any expenses related to the rental are nondeductible. If you itemize, you can still deduct qualified mortgage interest and real estate taxes on your vacation home.

Other tax rules, such as passive activity and capital gains reporting, can also impact the decision to rent out your vacation home. Be sure to check with your tax advisor to review your options under the tax rules.

If you are considering a vacation home, or investment income property here in the La Quinta CA area... be sure to give me a call or email. There are some very good deals right now, particularly in the "off season" summer months.

Larry Hansen, CPA, Broker / Owner

Calif Desert Realty

www.CalifDesertRealty.com

 

Do a reality check before retiring
04/21/2011
share
Are you thinking about retirement? If so, it is important that you review your finances and develop a retirement strategy… and perform a reality check on your retirement resources and expectations. Here are some helpful tips: Create a… more
Short Sales Risk Management Questions
03/03/2011
share
Hello A/R I am not a short salespecialist and don't take short sale listings… however I do work with Buyers in purchasing short sale properties, as do my sales associates so want to make sure I understand certain potential risk management issues… more
La Quinta CA ~ PGA West and Citrus Bankruptcy Debt Restructuring…
02/26/2011
share
Real estate agents serving the La Quinta CA communities have been attempting to field a lot of questions lately regarding the Chapter 11 bankruptcy protection / debt restructuring at PGA West and The Citrus in La Quinta. To assist in explaining this… more
Talk finances with your elderly parents
02/26/2011
share
One day you may find yourself taking care of an elderly parent who is in declining physical or mental health. This can be stressful, both emotionally and financially. On the financial side, there are steps you may want to take to prepare for this… more
Home buyers and sellers real estate tips ~ appraisals
10/29/2010
share
Many home buyers and home sellers don't understand how the appraisal process works, or how the hundreds of dollars they're charged for an appraisal are being allocated. Here's a quick overview: In most cases, the appraisal fee isn't just going to… more
Is buying a home better than renting?
09/16/2010
share
I get asked this question quite a lot these days… Is buying a home better than renting? I have heard lots of pros and cons on this subject, so… here is my two cents worth… Granted, owning a home might never create the opportunities that… more
Low Ball Offers, Not All Homes Are Distressed Properties
09/07/2010
share
Interesting post by Diane Casale on making low ball offers. I always suggest my buyers start out with a low ball offer in this current market envirnoment, as you just never know what the seller's bottom price is, and how badly they want or need to… more
No Lock Box-No Show!
09/02/2010
share
Great post by Stephen Munson on why having lock boxes are so important! We have some listings that are high end and need to be present to show the home, but when working with buyers, with limited time to look, not having a lock box for a quick… more
I JUST RECEIVED AN OFFER BUT I REFUSE TO COUNTER
08/28/2010
share
Via Dan Jasmer (RE/MAX Excellence) : Have you ever been involved in selling a home where an offer was made and you refused to counter the buyers offer? Here is some advice for sellers to consider, especially in today’s economic environment… more
 
Rainmaker_large

Larry Hansen

La Quinta, CA

More about me…

Calif Desert Realty

Address: 56635 Riviera, La Quinta, CA, 92253

Office Phone: (760) 668-2486

Cell Phone: (760) 668-2486

Email Me

e-PRO REALTOR Larry Hansen, CPA and Broker / Owner of Calif Desert Realty resides at PGA WEST in La Quinta, CA and specializes in gated and golf communites in La Quinta PGA West and surrounding areas. Visit his website at www.CalifDesertRealty.om and his La Quinta, CA neighborhood listings at www.Point2Homes.com


Listings

Links

Archives

RSS 2.0 Feed for this blog