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Vacation Home Rentals
If your clients rent a home to others, they usually must report the rental income on their tax returns. However, they may not have to report the rent they get if the rental period is short and they use the property as their home. If the property is used as a home and they rent it out fewer than 15 days per year, they do not have to report the rental income. In this case they can deduct their qualified expenses on Schedule A. In most cases, they can deduct their rental expenses. If the property is used as a home, the rental expense deduction is limited; that is, it can’t be more than the rent they received. Rental income may also be subject to Net Investment Income Tax.