As a result, vacation homeowners may be entitled to certain tax benefits that could help make their vacation home more affordable. Under IRS rules, a vacation property can be rented for up to two weeks (14 nights) each year without the need to report rental income. In many counties, towns and cities, local authorities try to regulate or ban vacation rentals following complaints from local residents or competing accommodation companies. In addition, a large 21% segment of unsold inventory, and therefore still controlled by the resort, is available as vacation rentals.
Homeowners who rent vacation homes can take advantage of certain tax benefits, making a second home more affordable. Vacation homeowners have specific rules that must be followed so that the landlord can deduct expenses related to rental property. You can deduct legal and professional expenses (such as tax return preparation costs) and any expenses that have been paid to resolve an underpayment of taxes related to your vacation rental. Finally, if you still have a loan for your vacation rental business, you lose the tax protection you would otherwise have on other types of returns.
A timeshare may still be available as a vacation rental if a landlord decides to put their own week (s) into a vacation rental program. Another major concern is that people can create fake accounts and advertise vacation homes that they don't actually own. For example, if you have a giant mortgage on your primary residence and you pay high property taxes, there may be no room left to deduct mortgage interest or property taxes from your vacation home. I didn't know that the landlord of the vacation rental can only be on your property 14 days throughout the year.
My biggest concern about using a vacation rental was that my wife and I had to see landlords every day. The fundamental principle of federal income tax for a mixed-use vacation home that is classified as a personal residence is that deductible expenses assignable to the use of rent cannot exceed gross rental income.