If you are lucky enough to own a gorgeous vacation home and want to rent it out during the summer months, there is no doubt that it’s a perfect way to make some extra money and it’s a great decision to make. However, you need to remember to give IRS a cut of that money! That’s right, not paying tax on renting out your vacation property is illegal and could get you in serious trouble including a big fine or even jail time. There is a slight loophole in this because if somebody is paying you rent for LESS than 14 days a year, it’s suddenly tax-free! Expenses such as repairs, mortgage interests, and utilities are deductible too because they are all on you, no matter who is staying in the property at the time.
If you are renting out your apartment, condo or whatever property you have for longer than that 14 day threshold, The Internal Revenue Service are going to want to know about it so that you can pay them a portion. A simple phone call is all it takes to notify them of this extra cash that you’ve got coming in and they are going to tax you a particular percentage. There are certain deductions that can be made on the tax you pay to save you some money if you meet certain criteria and the IRA will inform you on this when you contact them,
Renting out a vacation property has many advantages and it’s something that more and more people are doing but you need to make sure that you are doing everything correctly and legally. More and more people are renting vacation properties instead of hotels, so if you have one that you do not use all year long it’s definitely worth going through the process and making yourself some decent cash.