If you have a rental property, you are required to report the income you receive from tenants on your tax return.  However, if you have a property that you use as your own home for most of the year, but rent for a short term, you may not have to report the income. In fact, you may even be able to deduct any costs you incur from renting, but the deduction may have limitations if it’s also your home. If you rent a vacation home, you’ll need to be aware of how it can affect you at tax time.

Vacation Home – almost any property can classify as a vacation home, including a house, apartment, condo, mobile home, or a boat.

Schedule E – Rental income is reported by filing Schedule E, Supplemental Income and Loss. The Net Investment Income Tax may apply to any income from rental units.

Your Home – Your ability to deduct costs associated with renting is lessened if you also use the property as your own home. Basically, your deduction can’t exceed the amount of rental income you obtained.

Division of Costs – Special rules take effect when you both use and rent your home. You’ll have to divide the expenses you incur between the personal use of your home and the tenancy part. A good method of determining how to divide the expenses, you should compare the total days of use with the type of use on each day.

Personal Use – Classified as any property owner and their family, personal use also applies to any tenant who pays less than a fair market rental rate.

Schedule A – Any expenses to be deducted are reported on Schedule A, Itemized Deductions. Things like mortgage interest, property taxes, and casualty losses may qualify for deduction.

15 Day Window – If you rented your property for less than 15 days in a year, and the property also falls under the personal use category, you will not be required to report the rental income.