{"id":109197,"date":"2019-04-01T14:30:32","date_gmt":"2019-04-01T20:30:32","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=109197"},"modified":"2021-03-16T14:53:06","modified_gmt":"2021-03-16T20:53:06","slug":"top-vacation-rental-tax-tips","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/top-vacation-rental-tax-tips","title":{"rendered":"3 Tax Tips for Vacation Rental Owners"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">[<i>Disclaimer: This is designed to provide general information regarding the subject matter covered. It is not intended to serve as legal, tax, or other financial advice related to individual situations. Consult with your own attorney, CPA, and\/or other advisor regarding your specific<\/i> <em>situation<\/em>.]<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Everyone\u2019s favorite time of year is upon us\u2014tax time. Filing your taxes can become even more complicated when you add a vacation home or short-term rental to the mix. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">If you are not using a professional property manager that handles vacation rental taxes on your behalf, there are a few key things you\u2019ll want to consider when filing your <\/span><span style=\"font-weight: 400;\">vacation rental taxes<\/span><span style=\"font-weight: 400;\">.<\/span><\/p>\n<p><em><strong>Related: <\/strong><\/em><em><a href=\"\/renewsblog\/2013\/01\/14\/should-i-do-my-own-taxes\/\" target=\"_blank\">Should You Prepare Your Own Tax Returns?<\/a><\/em><\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-108015\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2019\/02\/TAXES-BLOCKS.jpg\" alt=\"letters taxes on wooden blocks with calculator and pen\" width=\"702\" height=\"340\" title=\"\" srcset=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2019\/02\/TAXES-BLOCKS.jpg 702w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2019\/02\/TAXES-BLOCKS-300x145.jpg 300w\" sizes=\"auto, (max-width: 702px) 100vw, 702px\" \/><\/p>\n<h2>Key Considerations When Filing Vacation Rental Taxes<\/h2>\n<h3>1. Choose the correct form.<\/h3>\n<p><span style=\"font-weight: 400;\">First, you\u2019ll want to make sure that you are using the right form, which is typically going to be an IRS Schedule E or C. Which form you choose is based upon whether you are renting out your property as supplemental income (IRS Schedule E) or if you manage the property as your primary business activity (IRS Schedule C). For either form, you\u2019ll need to have a list of documented expenses, all 1099s filed reporting contractor payments, property usage schedule, and gross rental income.<\/span><\/p>\n<h3>2. Track how the property is used.<\/h3>\n<p><span style=\"font-weight: 400;\">Second, the amount you use your property will have an impact on how much you are able to write off. <\/span><\/p>\n<p>In simplest terms, the 14-day rental rule means you don\u2019t pay taxes on the income you receive from your short-term rental if BOTH of the following are true:<\/p>\n<ul>\n<li>You rent out the property for less than 14 days<\/li>\n<li>You use the property yourself for 14 days or more<\/li>\n<\/ul>\n<p>However, if you rent the property out for more than 14 days and use it yourself for less than 14 days, taxes can become a bit more complex.<\/p>\n<p><span style=\"font-weight: 400;\">The IRS will want to see a log of each day the property was in use, so it\u2019s important to carefully document vacation rental days, personal use days, and days used for repairs and maintenance (which cannot be combined with days friends and family are using the home). <\/span><\/p>\n<p><span style=\"font-weight: 400;\">If you rent your property for more than 14 days, you may be able to write off a good portion of your expenses. In this case, vacation home tax deductions vary by state, so make sure you are familiar with the rules and keep detailed records. It\u2019s required by law that you keep receipts for each expense you deduct, so create a system for tracking and filing your expenses so you aren\u2019t scrambling to locate receipts.<\/span><\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-106641\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2019\/01\/notebook-income-taxes.jpg\" alt=\"taxes, rental property, real estate investor, rental income\" width=\"702\" height=\"336\" title=\"\" srcset=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2019\/01\/notebook-income-taxes.jpg 702w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2019\/01\/notebook-income-taxes-300x144.jpg 300w\" sizes=\"auto, (max-width: 702px) 100vw, 702px\" \/><\/p>\n<h3>3. Document rehab and repair expenses.<\/h3>\n<p><span style=\"font-weight: 400;\">Last, while you are able to write off repairs to your vacation home (think fixing a leaky toilet or broken window) improvements are handled much differently. Instead of being written off in the year of the expense, they are deducted over the use of their lifetime. But don\u2019t shy away from getting improvements down on paper\u2014they are indeed tax free income. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">In addition, i<\/span><span style=\"font-weight: 400;\">t&#8217;s worth mentioning that having a property management company caring for your vacation home has a multitude of benefits. A full-service vacation rental property manager won\u2019t just clean and maintain your property, they\u2019ll also handle the paperwork and logistics for the state sales and hotel taxes and give you the information you need for state income taxes on your rental. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">If you choose instead to self-manage, keep the above tips in mind when filing taxes. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">[<em>Disclaimer:<\/em><\/span><i><span style=\"font-weight: 400;\"> This is designed to provide general information regarding the subject matter covered. It is not intended to serve as legal, tax, or other financial advice related to individual situations. Because each individual&#8217;s legal, tax, and financial situation is different, specific advice should be tailored to the particular circumstances. For this reason, you are advised to consult with your own attorney, CPA, and\/or other advisor regarding your specific situation. <\/span><\/i><\/p>\n<p><i><span style=\"font-weight: 400;\">The information provided here is for your use and convenience only. We have taken reasonable precautions in the preparation of this material and believe that the information presented is accurate as of the date it was written. However, we will assume no responsibility for any errors or omissions. We specifically disclaim any liability resulting from the use or application of the information contained in this publication.<\/span><\/i>]<\/p>\n<p>______________________________________________________________________________________<\/p>\n<p><a href=\"https:\/\/www.biggerpockets.com\/taxbook\" target=\"_blank\"><img loading=\"lazy\" decoding=\"async\" class=\"alignleft wp-image-107463\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2019\/02\/Screen-Shot-2019-02-08-at-10.02.18-AM-232x300.png\" alt=\"\" width=\"150\" height=\"194\" title=\"\" srcset=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2019\/02\/Screen-Shot-2019-02-08-at-10.02.18-AM-232x300.png 232w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2019\/02\/Screen-Shot-2019-02-08-at-10.02.18-AM-768x993.png 768w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2019\/02\/Screen-Shot-2019-02-08-at-10.02.18-AM-792x1024.png 792w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2019\/02\/Screen-Shot-2019-02-08-at-10.02.18-AM.png 1222w\" sizes=\"auto, (max-width: 150px) 100vw, 150px\" \/><\/a><\/p>\n<p><em>Want to learn how you could be saving more on your real estate taxes using loopholes, deductions, and more?\u00a0<\/em><em>Get the inside scoop from Amanda Han and Matthew MacFarland, real estate investors and CPAs, in <\/em>Tax Strategies for the Savvy Real Estate Investor.\u00a0<a href=\"https:\/\/www.biggerpockets.com\/taxbook\" target=\"_blank\"><em>Pick up your copy from the BiggerPockets bookstore today!<\/em><\/a><\/p>\n<p>______________________________________________________________________________________<\/p>\n<p><em>Are you getting the most out of the tax benefits available to investors?<\/em><\/p>\n<p><strong>Let&#8217;s discuss in the comment section below.\u00a0<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>It&#8217;s tax time. Filing your taxes can become even more complicated when you add a vacation home or short-term rental to the mix. If you&#8217;re not using a tax pro and plan on filing your own vacation rental taxes, there are a few key things you\u2019ll want to consider.<\/p>\n","protected":false},"author":196174,"featured_media":109319,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[5524],"tags":[],"class_list":["post-109197","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-real-estate-investing-for-beginners"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/109197","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/196174"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=109197"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/109197\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/109319"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=109197"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=109197"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=109197"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}