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No tax vacancy on rental properties

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in Small Business Tax

Q. I read your article on a child’s college lodging and I’m a little confused. Haven’t you said that property can’t be used for rental if you or your family have used it for more than 14 days during the year? L.H., via e-mail

A. Not exactly. The tax-law rule on personal use does not prohibit you from using the property for rental purposes. Rather, it is a limit on deductions. If you use the property personally for the greater of 14 days or 10 percent of the time you rent out the property, your deductions cannot exceed the amount of your rental income (i.e., you can’t claim a loss for the year).

Tip: Even if you don’t trigger the personal-use rules, losses from rental activities may be limited by special rules for passive activities.

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