Vacation Home
Vacation Home means:
a dwelling used by its owner occasionally for recreational or resort purposes; it may be rented to others for a portion of the year. Income tax deductions pertaining to vacation homes depend on the frequency of use by the owner. Generally a business loss cannot be claimed on a vacation home. Three possible tax treatments are available for vacation homes:
1. If the home is rented for fewer than 15 days, it is treated as a personal residence, and rent income is excluded from income. Mortgage interest and property taxes are treated as itemized deductions.
2. If the house is not used for personal purposes more than the greater of (a) 10% of the total days rented and (b) 14 days, it is treated as rental property. Any rental loss is treated as a passive activity loss.
3- If the house is rented for 15 or more days and is used for personal purposes more than the greater of (a) 10% of the total days rented and (b) 14 days, expenses are allowable only to the extent of income. Former IRC (check if this IRC provision is current here) §280A.
Example of Vacation Home:
Learn more about tax examples, explanations and calculations here.
The Austins have a vacation home in the mountains that they use on weekends during the summer (at least 20 days). At other times it is rented to strangers by the week (about 90 days). If business deductions, including depreciation, exceed income, the loss cannot be deducted.
See Property Tax in the American Legal Encyclopedia and Property Tax in the World Legal Encyclopedia.
See Depreciation in the United States Encyclopedia of Law and Depreciation in the World Encyclopedia of Law.
Description and Definition of Vacation Home
A second home that may also be rented out at times to others. The tax law limits deductions for vacation homes broadly defined as any dwelling unit used by the owner or the owner's relatives for more than a specified period.
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