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For Rent in 90210 : Real Estate Advice

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Activity 2
Thu May 12, 2016
Galinanovikova1950 asked:
Thu Apr 12, 2012
Steven Ornellas answered:
Rentahen:

You definitely need to speak to a CPA for a final definitive answer regarding your question.

My personal understanding is that one can still take the mortgage interest deduction (MID) and rent their personal residence out tax-free for up to 14 days a year; HOWEVER, once you surpass 14 days:

1) You have to claim all the rent as income (if you do not exceed the 14 day rule the rent is tax-free),

2) You lose your right to claim the MID and

3) You cannot claim business expenses or depreciation.

See:
Topic 415 - Renting Residential and Vacation Property (formerly Renting Vacation Property and Renting to Relatives)
http://www.irs.gov/taxtopics/tc415.html

Publication 527 (2011), Residential Rental Property
http://www.irs.gov/publications/p527/index.html

Publication 936 (2011), Home Mortgage Interest Deduction
http://www.irs.gov/publications/p936/index.html

-Steve
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