Is Your Vacation Home a Vacation Home? If you bought your vacation home exclusively for personal enjoyment, you can generally deduct your mortgage interest and real estate taxes, as you would on a primary residence. Use Schedule A to take the deductions.

Can you depreciate your vacation home?

Additionally, vacation rental property tax deductions can include depreciation of the asset. Any part of the home that is used for rental purposes is depreciating and may be deducted up to a certain amount.

What are the rules for renting a home for vacation?

Since vacation homes usually get this kind of treatment, the rules you must follow are known as vacation-home rules. Home used mostly by the owner If the home is your main home and you rent it out for fewer than 15 days during the year, you don’t need to report income. However, you can’t deduct expenses associated with the rental.

Do you have to pay taxes on a vacation home?

Vacation Home Rental Tax Rules. You might own a home that you live in part of the year and rent out part of the year. If so, prorate the expenses you incur between personal and rental use. Since vacation homes usually get this kind of treatment, the rules you must follow are known as vacation-home rules.

When does rental time count as personal use?

A tenant paying fair rental value might allow the owner to stay in the home. If so, the time is considered personal use when deciding if the dwelling is a residence. When figuring the ratio for prorating expenses, the time is counted as rental use. (See Rental-use time below.)

How to calculate rental rate for vacation home?

Rental use is any day you rent the dwelling at a fair rental value. So, you can only count the days when you actually receive rent payment to figure the ratio. To figure the proration rate, divide the number of days you rented the home at fair rental value by the total days used for both personal and business purposes.