You'll want to consider these tax tips for renting out your vacation home whether you are hosting every weekend or just a few times a year. Renting your getaway occasionally can be a great strategy to offset some of your expenses. That's fine, as long as you don't set off any alarms with the IRS. You may also have to consider state and local taxes, depending on the type of rental you offer.
So, whether you are signing up with Airbnb, VRBO, HomeAway or a private listing, read on to save money and headaches at tax time.
Tax tips for renting out your vacation home
1. If you rent out your house for 14 days or fewer during the year, you don't have to report the rental income on your tax return. And there's no limit to how much you can charge. The house is considered a personal residence so you deduct mortgage interest and property taxes just as you do for your primary home. However, you cannot deduct any rental expenses if you stay within the 14-day limit.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
For more on the tax benefits and considerations involving tax-free rental income, see Kiplnger's report: Tax-Free Rental Income: IRS Legal Rules to Know.
2. If you rent out your house for more than 14 days, you become a landlord in the eyes of the IRS. That means you have to report your rental income. But it also means you can deduct rental expenses. It can get complicated because you need to allocate costs between the time the property is used for personal purposes and the time it is rented.
Your rental property's expenses, such as repairs, maintenance, property taxes, and mortgage interest, can be deducted from the rental income, which can lower your tax liability. Most landlords will need to report their rental income and expenses on Form 1040 or 1040-SR, Schedule E, Part I.
Also, keep in mind that some states and localities may charge an additional tax on short-term rentals like Airbnb or VRBO. As Kiplinger has reported, proposed legislation in California, for example, would levy a 15% tax on such rentals as a way to help pay for affordable housing.
3. If you use the place for more than 14 days or more than 10% of the number of days it is rented — whichever is greater — it is considered a personal residence. You can deduct rental expenses up to the level of rental income. But you can't deduct losses.
4. The definition of "personal use" days is fairly broad. They may include any days you or a family member use the house (even if the family member is paying rent). Personal days also include days on which you have donated use of the house — say, to a charity auction — or have rented it out for less than fair market value.
5. If you limit your personal use to 14 days or 10% of the time the vacation home is rented, it is considered a business. You can deduct expenses and, depending on your income, you may be able to deduct up to $25,000 in losses each year. That's why many vacation homeowners hold down leisure use and spend lots of time "maintaining" the property; fix-up days don't count as personal use.
Read More
- Tips for Renting Out Your Home on Airbnb
- Tax-Free Rental Income: IRS Legal Rules to Know
- 5 Great Places to Buy a Vacation Home
- Demand for Vacation Homes Down 50% from Pre-Pandamic Levels
-
Seven Surprising Reasons Retirees Are Going Back to WorkSure, money is a big reason to come out of retirement, but it's not the only reason retirees are doing it.
-
Dow Gains 617 Points as Rate Cuts Near: Stock Market TodayWednesday's economic data didn't shift Wall Street's expectations that the Fed is preparing for a rate cut at next week's meeting.
-
IRS in Turmoil: GOP Budget Cuts and Staff Shake-Ups Threaten Taxpayer ServicesIRS Republican lawmakers advance a controversial budget bill that would gut IRS funding further, risking your 2026 tax filing season.
-
Ask the Editor, September 5: Tax Questions on SALT DeductionAsk the Editor In this week's Ask the Editor Q&A, we answer questions from readers on the OBBB's changes to the SALT deduction.
-
Claiming the Standard Deduction? Here Are 10 Tax Breaks For Middle-Class Families in 2025Tax Breaks Working middle-income Americans won’t need to itemize to claim these tax deductions and credits — if you qualify.
-
Another State Rebels Against Trump’s New 2025 Tax Law: What Now?State Taxes Even if states adopt tax policies in the so-called ‘big beautiful bill,’ lawmakers may have workarounds at their fingertips.
-
Ask the Editor, August 29: Tax Questions on Estate and Gift TaxesAsk the Editor In this week's Ask the Editor Q&A, we answer questions from readers on estate and gift taxes.
-
Will You Get a ‘Surprise’ Tax Bill on Your Social Security Benefits in Retirement?Retirement Taxes Social Security benefit payments might land you in hot water when filing 2025 taxes — here are three reasons why.
-
Ask the Editor, August 22: Tax Questions on What Congress Will Do NextAsk the Editor In this week's Ask the Editor Q&A, we answer questions from readers on what Congress will do next with taxes.
-
Ask the Editor, August 15: Tax Questions on the OBBB, Tax RatesAsk the Editor In this week's Ask the Editor Q&A, we answer tax questions from readers on the OBBB and changes, if any, to tax rates.
