Summer rentals for 2013 have been stronger than they have been in years, and purchases of vacation homes are on the rise after years of a housing slump. There are tax write-offs for owning a second home. What’s more, the vacation home can provide rental opportunities. It’s understandable to think of vacation homes as only in terms of beachfront or lakefront properties. The tax law doesn’t think this way. Vacation homes aren’t limited to waterfront condos or ski chalets; they can include a boat or an RV, as long as the property includes sleeping, cooking, and toilet facilities. Even time shares may qualify for certain tax breaks that go with home ownership.

Reporting Rental Income

Rental income usually is includable in gross income, but can be offset by certain expenses related to the vacation home (explained below). However, there’s one exception that can give you tax-free income. You do not have to report the rent you receive for a rental that is no more than 14 days. Thus, if you rent your beachfront property for 10 days, the rent you receive is tax free.

Deducting Rental Expenses

Three costs related to the ownership of a vacation home can be taken if you itemize deductions. These deductions are allowed without regard to whether you rented the property: Read More