Here's What You Need to Know If You Own Rental Property

Renting out a space during the summer months can be a very easy and effective way to make income. What may not be so easy is how to report that on a tax return.

The first thing to determine is whether or not you are also using this rental property for personal use. A property counts as a residence if used for personal purposes during the tax year for more than 14 days or more than 10% of the total days you rent it to others at a fair rental price.

For example, if you live in your main home for 11 months out of the year, your home is considered a residence. If you live in your vacation home for 1 month out of the year, that property is also a residence unless it is rented to someone else 300 or more days out of the year.

If your property does count as a personal residence, and you rent it out to someone for less than 15 days, you would not report any of the rental income or deduct any rental expenses.

For properties that are used for both personal and rental purposes, total expenses must be divided between personal use and rental use based on how many days the property was used for each. If your gross rental income is less than the amount of expenses you pay for rental use, you will not be able to deduct your rental expenses, but you may be able to carry those expenses forward to the next year. (Ask your tax preparer about itemizing!)

Information taken from irs.gov