If I have a vacation home, where my costs are MORE than my rental intake, how do i treat on my tax form?
Let’s say my mortgage, property tax, HOA cost $10,000/month but I only get $4,000/month in income. Can I deduct $72,000 from my income given this is how much I lose?
Is there such a category, where i treat my rental unit as a business? Also, are there any limitations if I stay in the unit a certain amount of days when it’s not getting rented out?
thnx
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Tags: Hoa, Mortgage Tax, Tax Form
vacation property | , 30 May 10
By Omars Friend, May 31, 2010 @ 12:47 pm
I say if you don’t make it don’t spend it… ???
By Tammi D, June 1, 2010 @ 3:38 am
talk to the bloch brothers (the company they formed is spelled block, because they didn’t want people to mispronounce their name as blotch)
By Barry auh2o, June 3, 2010 @ 9:49 am
Be very careful here. The IRS is hammering down on people who own vacation homes and rent them out part of the year.
I would suggest you get a professional preparer to do your return, it would probably save you in taxes at least what he would charge you.In my experience as a preparer, the first thing you did when the client left was reach for the aspirin.
By girly_heather23, June 5, 2010 @ 8:10 pm
NO rental property is considered passive investment. If you had other passive investment where you had a gain of 72,000 then you would be able to write off against it. But you can only write off what you earned.
By ninasgramma, June 6, 2010 @ 11:16 am
If this were your only passive income activity, you would not be able to deduct $72,000. Your deductible loss is at most $25,000. If your AGI is greater than $100,000, your loss is further limited.
If this home is used by you personally, depending on the amount of use, you may not be allowed any loss regardless of your income. However, if this is your second residence, you could still deduct the mortgage interest and property taxes.
The treatment of your income and expenses on the property depends on how much personal use you have, how much rental use you have, your AGI, and your other passive income.
You could not treat your vacation home as a business, since you are not in the business of renting vacation homes. Your rental income is passive.
By MukatA, June 7, 2010 @ 8:29 pm
This is passive activity, so the losses that you can deduct are limited.
If you use the vacation home for personal dwelling, then you may need to divide your expenses between the rental use and personal use.
You should read
Publication 527: Residential Rental Property; Limits on Rental Losses (& Personal Use of Dwelling Unit).