If I stay in my personal residence for more than 14 days in a tax year, and rent it out for four months while I live abroad and travel, do vacation home or personal home rules apply in terms of treating the rental income?
" snipped-for-privacy@gmail.com" wrote
What rules apply would limit your losses. So worst case is you break even for tax purposes.
Except for items otherwise allowable to you on Schedule A, you won't have a loss.
Do I pro rate my expenses on Schedule A? If so, how? I lived in the house 48 days; rented it 62 days; it was listed as available for rent and empty for 60 days; under contract to lease and empty for 30 days and empty and offered for sale without being used personally for 164 days. Is there a formula?
========================================= MODERATOR'S COMMENT:
- please trim the post to which you are responding.
See
More than one second home. If you have more than one second home, you can treat only one as the qualified second home during any year. However, you can change the home you treat as a second home during the year in the following situations.
- If your main home no longer qualifies as your main home, you can choose to treat it as your second home as of the day you stop using it as your main home.
This means that your home is a qualifed home and you can deduct mortgage interest and property tax on Schedule A. But I'm not completely sure, as publication 936 does not have a section on primary home rented out.
It appears the home was available for rent 62+60+302 days (even though it was empty for 90 of these days). So if you lived in the house for more than max(14, 0.1*152).2 days, then it is a qualified home. You lived in the house 48 days.
On Schedule E you would have to deduct depreciation for 152 days. I'm not sure if you have to take depreciation for 5 months or 152 days though. But all the mortgage interest and property tax would be on Schedule A, so wouldn't appear on Schedule E. On the other hand, it might be better to treat the home as non-qualified for the time that it was available for rent because that would move some of the property tax and mortgage interest to Schedule E where it would not be subject to the itemized deduction phaseout and AMT, and even if you didn't get to deduct the loss, it would get carried over till when you turn a profit or sell the house.
I'm not sure if the 25k loss is reduced the rental is for part of the year. Seems that it should be.reduced to 152/365*25000411.
There's a reason for that. See below.
There is no $25k loss allowance here. It's his primary residence for which he was TEMPORARILY away and rented it. Section 280A limits apply before one gets to the passive loss rules of section 469. Furthermore, see 469(j)(10) which pretty much kills the allowance.
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