In chapter 1, we looked at the rules for residential rental activities where the rental dwelling unit was separate from where you lived. In this chapter, we are looking at rental activities where the same dwelling unit is used both as your home (or is considered to be your home) and as a rental. This might be a vacation home or your main home, a recreational vehicle or a boat. In this case, expenses must be divided between rental use and personal use, and you will not be able to deduct rental expenses that are more than your rental income for that dwelling unit.taxmap/pubs/p527-017.htm#en_us_publink100027415
A dwelling unit includes a house, apartment, condominium, mobile home, boat, vacation home, or similar property. It also includes all structures or other property belonging to the dwelling unit. A dwelling unit has basic living accommodations, such as sleeping space, a toilet, and cooking facilities.
A dwelling unit does not include property (or part of the property) used solely as a hotel, motel, inn, or similar establishment. Property is used solely as a hotel, motel, inn, or similar establishment if it is regularly available for occupancy by paying customers and is not used by an owner as a home during the year. taxmap/pubs/p527-017.htm#en_us_publink100027416
You rent a room in your home that is always available for short-term occupancy by paying customers. You do not use the room yourself and you allow only paying customers to use the room. This room is used solely as a hotel, motel, inn, or similar establishment and is not a dwelling unit.taxmap/pubs/p527-017.htm#en_us_publink100027417
A day of personal use of a dwelling unit is any day that the unit is used by any of the following persons.
- You or any other person who owns an interest in it, unless you rent it to another owner as his or her main home under a shared equity financing agreement (defined on this page). However, see Exception for Use as Main Home Before or After Renting under Dwelling Unit Used As a Home, later.
- A member of your family or a member of the family of any other person who owns an interest in it, unless the family member uses the dwelling unit as his or her main home and pays a fair rental price (defined on this page). Family includes only your spouse, brothers and sisters, half-brothers and half-sisters, ancestors (parents, grandparents, etc.), and lineal descendants (children, grandchildren, etc.).
- Anyone under an arrangement that lets you use some other dwelling unit.
- Anyone at less than a fair rental price.
If the other person or member of the family in (1) or (2) above has more than one home, his or her main home is ordinarily the one he or she lived in most of the time. taxmap/pubs/p527-017.htm#en_us_publink100027419
This is an agreement under which two or more persons acquire undivided interests for more than 50 years in an entire dwelling unit, including the land, and one or more of the co-owners is entitled to occupy the unit as his or her main home upon payment of rent to the other co-owner or owners. taxmap/pubs/p527-017.htm#en_us_publink100027420
You use a dwelling unit for personal purposes if:
- You donate the use of the unit to a charitable organization,
- The organization sells the use of the unit at a fund-raising event, and
- The "purchaser" uses the unit.
The following examples show how to determine if you have days of personal use.taxmap/pubs/p527-017.htm#en_us_publink100027422
You and your neighbor are co-owners of a condominium at the beach. Last year, you rented the unit to vacationers whenever possible. The unit was not used as a main home by anyone. Your neighbor used the unit for 2 weeks last year; you did not use it at all.
Because your neighbor has an interest in the unit, both of you are considered to have used the unit for personal purposes during those 2 weeks. taxmap/pubs/p527-017.htm#en_us_publink100027423
You and your neighbors are co-owners of a house under a shared equity financing agreement. Your neighbors live in the house and pay you a fair rental price.
Even though your neighbors have an interest in the house, the days your neighbors live there are not counted as days of personal use by you. This is because your neighbors rent the house as their main home under a shared equity financing agreement. taxmap/pubs/p527-017.htm#en_us_publink100027424
You own a rental property that you rent to your son. Your son does not own any interest in this property. He uses it as his main home and pays you a fair rental price.
Your son's use of the property is not personal use by you because your son is using it as his main home, he owns no interest in the property, and he is paying you a fair rental price. taxmap/pubs/p527-017.htm#en_us_publink100027425
You rent your beach house to Rosa. Rosa rents her cabin in the mountains to you. You each pay a fair rental price.
You are using your beach house for personal purposes on the days that Rosa uses it because your house is used by Rosa under an arrangement that allows you to use her cabin. taxmap/pubs/p527-017.htm#en_us_publink100027426
You rent an apartment to your mother at less than a fair rental price. You are using the apartment for personal purposes on the days that your mother rents it because you rent it for less than a fair rental price. taxmap/pubs/p527-017.htm#en_us_publink100027427
Any day that you spend working substantially full time repairing and maintaining (not improving) your property is not counted as a day of personal use. Do not count such a day as a day of personal use even if family members use the property for recreational purposes on the same day. taxmap/pubs/p527-017.htm#en_us_publink100027428
Corey owns a cabin in the mountains that he rents for most of the year. He spends a week at the cabin with family members. Corey works on maintenance of the cabin 3 or 4 hours each day during the week and spends the rest of the time fishing, hiking, and relaxing. Corey's family members, however, work substantially full time on the cabin each day during the week. The main purpose of being at the cabin that week is to do maintenance work. Therefore, the use of the cabin during the week by Corey and his family will not be considered personal use by Corey.