Tax Drill $-$ Rental of Residence

Complete the following statements regarding the tax treatment of vacation home rentals.

a$.$ If the residence is rented for fewer than $15$ days in a year, it is treated as

a personal residence

$.$ The rent income is

excluded from

gross income, and mortgage interest and real estate taxes are allowed as

itemized deductions

$.$

b$.$ If the residence is rented for $15$ days or

more

in a year and is not used for personal purposes for more than the greater of $(1)$ fill in the blank $5$

days or $(2)$ fill in the blank $6$

percent of the total days rented, the residence is treated as

rental property

$.$ The deduction of the expenses allocated to rental days

can

exceed rent income and result in a rental loss.

c$.$ If the residence is rented for $15$ days or

more

in a year and is used for personal purposes for more than the greater of $(1)$ fill in the blank $10$

days or $(2)$ fill in the blank $11$

percent of the total days rented, it is treated as

a personal$/$rental use residence

$.$ Expenses

are allowed only to the extent of

rent income.

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Restrictions on the deductions allowed for part$-$year rentals of personal vacation homes were written into the law to prevent taxpayers from deducting essentially personal expenses as rental losses. Many taxpayers who own vacation homes use the property for personal use during a portion of the year and rent the property at other times.