Do you own a “vacation home” near a beach or in the mountains? It’s a great place, but maybe your children have grown up and moved away or the place has become too expensive to maintain—or both.
Strategy: Rent out the home part of the year. Although it can be a hassle, especially for first-time landlords, the cash flow and tax benefits may outweigh the inconvenience.
For starters, the rental income you receive can pay for most or all of the carrying costs. You can use rental expenses—repairs, utilities, insurance and depreciation—to offset the income for tax purposes. Depending on your situation, you might turn it into a tax loss.
However, if you’re not careful, you may fall into a tax trap for excessive “personal use.” That’s why it’s important to firm up plans before the summer rental season begins in earnest.
Here’s the whole story: If your personal use of the vacation home exceeds the greater of 14 days or...(register to read more)