skip navigation

Search Help
Navigation Help

Tax Map Index
ABCDEFGHI
JKLMNOPQR
STUVWXYZ#

International
Tax Topic Index

Affordable Care Act
Tax Topic Index

Forms
Publications

Comments
About Tax Map

IRS.gov Website
Publication 17
taxmap/pub17/p17-047.htm#en_us_publink1000171692

Personal Use of
Dwelling Unit
(Including Vacation Home)(p70)

For Use in Tax Year 2013
rule
If you have any personal use of a dwelling unit (including a vacation home) that you rent, you must divide your expenses between rental use and personal use. In general, your rental expenses will be no more than your total expenses multiplied by a fraction; the denominator of which is the total number of days the dwelling unit is used and the numerator of which is the total number of days actually rented at a fair rental price. Only your rental expenses may be deducted on Schedule E (Form 1040). Some of your personal expenses may be deductible if you itemize your deductions on Schedule A (Form 1040).
You must also determine if the dwelling unit is considered a home. The amount of rental expenses that you can deduct may be limited if the dwelling unit is considered a home. Whether a dwelling unit is considered a home depends on how many days during the year are considered to be days of personal use. There is a special rule if you used the dwelling unit as a home and you rented it for less than 15 days during the year.
taxmap/pub17/p17-047.htm#en_us_publink1000283999

Dwelling unit.(p70)

For Use in Tax Year 2013
rule
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 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/pub17/p17-047.htm#en_us_publink1000284000
Example.(p70)
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. The room is used solely as a hotel, motel, inn, or similar establishment and is not a dwelling unit.
taxmap/pub17/p17-047.htm#en_us_publink1000284003

Dividing Expenses(p70)

For Use in Tax Year 2013
rule
If you use a dwelling unit for both rental and personal purposes, divide your expenses between the rental use and the personal use based on the number of days used for each purpose.
When dividing your expenses, follow these rules.
taxmap/pub17/p17-047.htm#en_us_publink1000284004

Example.(p70)

Your beach cottage was available for rent from June 1 through August 31 (92 days). During that time, except for the first week in August (7 days) when you were unable to find a renter, you rented the cottage at a fair rental price. The person who rented the cottage for July allowed you to use it over the weekend (2 days) without any reduction in or refund of rent. Your family also used the cottage during the last 2 weeks of May (14 days). The cottage was not used at all before May 17 or after August 31.
You figure the part of the cottage expenses to treat as rental expenses as follows.
Note.When determining whether you used the cottage as a home, the July weekend (2 days) you used it is considered personal use even though you received a fair rental price for the weekend. Therefore, you had 16 days of personal use and 83 days of rental use for this purpose. Because you used the cottage for personal purposes more than 14 days and more than 10% of the days of rental use (8 days), you used it as a home. If you have a net loss, you may not be able to deduct all of the rental expenses. See Dwelling Unit Used as a Home, next.
taxmap/pub17/p17-047.htm#en_us_publink1000284005

Dwelling Unit Used as a Home(p71)

For Use in Tax Year 2013
rule
If you use a dwelling unit for both rental and personal purposes, the tax treatment of the rental expenses you figured earlier under Dividing Expenses and rental income depends on whether you are considered to be using the dwelling unit as a home.
You use a dwelling unit as a home during the tax year if you use it for personal purposes more than the greater of:
  1. 14 days, or
  2. 10% of the total days it is rented to others at a fair rental price.
See What is a day of personal use, later.
taxmap/pub17/p17-047.htm#en_us_publink1000284008

Fair rental price.(p71)

For Use in Tax Year 2013
rule
A fair rental price for your property generally is the amount of rent that a person who is not related to you would be willing to pay. The rent you charge is not a fair rental price if it is substantially less than the rents charged for other properties that are similar to your property in your area.
If a dwelling unit is used for personal purposes on a day it is rented at a fair rental price, do not count that day as a day of rental use in applying (2) above. Instead, count it as a day of personal use in applying both (1) and (2) above.
taxmap/pub17/p17-047.htm#en_us_publink1000284016

What is a day of personal use?(p71)

For Use in Tax Year 2013
rule
A day of personal use of a dwelling unit is any day that the unit is used by any of the following persons.
  1. You or any other person who has an interest in the unit, unless you rent it to another owner as his or her main home under a shared equity financing agreement (defined later). However, see Days used as a main home before or after renting, later.
  2. A member of your family or a member of the family of any other person who owns an interest in the unit, unless the family member uses the dwelling unit as his or her main home and pays a fair rental price. Family includes only your spouse, brothers and sisters, half-brothers and half-sisters, ancestors (parents, grandparents, etc.), and lineal descendants (children, grandchildren, etc.).
  3. Anyone under an arrangement that lets you use some other dwelling unit.
  4. Anyone at less than a fair rental price.
taxmap/pub17/p17-047.htm#en_us_publink1000284013
Main home.(p71)
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/pub17/p17-047.htm#en_us_publink1000284014
Shared equity financing agreement.(p71)
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/pub17/p17-047.htm#en_us_publink1000284015
Donation of use of property.(p71)
You use a dwelling unit for personal purposes if:
taxmap/pub17/p17-047.htm#en_us_publink1000284022
Examples.(p71)
The following examples show how to determine days of personal use.
taxmap/pub17/p17-047.htm#en_us_publink1000284023

Example 1.(p71)

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/pub17/p17-047.htm#en_us_publink1000284024

Example 2.(p71)

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/pub17/p17-047.htm#en_us_publink1000284025

Example 3.(p71)

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/pub17/p17-047.htm#en_us_publink1000284026

Example 4.(p71)

You rent your beach house to Joshua. Joshua rents his cabin in the mountains to you. You each pay a fair rental price.
You are using your house for personal purposes on the days that Joshua uses it because your house is used by Joshua under an arrangement that allows you to use his house.
taxmap/pub17/p17-047.htm#en_us_publink1000284027
Days used for repairs and maintenance.(p71)
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/pub17/p17-047.htm#en_us_publink1000284028
Days used as a main home before or after renting.(p71)
For purposes of determining whether a dwelling unit was used as a home, you may not have to count days you used the property as your main home before or after renting it or offering it for rent as days of personal use. Do not count them as days of personal use if: However, this special rule does not apply when dividing expenses between rental and personal use.
taxmap/pub17/p17-047.htm#en_us_publink1000284029

Examples.(p71)

For Use in Tax Year 2013
rule
The following examples show how to determine whether you used your rental property as a home.
taxmap/pub17/p17-047.htm#en_us_publink1000284030

Example 1.(p71)

You converted the basement of your home into an apartment with a bedroom, a bathroom, and a small kitchen. You rented the basement apartment at a fair rental price to college students during the regular school year. You rented to them on a 9-month lease (273 days). You figured 10% of the total days rented to others at a fair rental price is 27 days.
During June (30 days), your brothers stayed with you and lived in the basement apartment rent free.
Your basement apartment was used as a home because you used it for personal purposes for 30 days. Rent-free use by your brothers is considered personal use. Your personal use (30 days) is more than the greater of 14 days or 10% of the total days it was rented (27 days).
taxmap/pub17/p17-047.htm#en_us_publink1000284031

Example 2.(p71)

You rented the guest bedroom in your home at a fair rental price during the local college's homecoming, commencement, and football weekends (a total of 27 days). Your sister-in-law stayed in the room, rent free, for the last 3 weeks (21 days) in July. You figured 10% of the total days rented to others at a fair rental price is 3 days.
The room was used as a home because you used it for personal purposes for 21 days. That is more than the greater of 14 days or 10% of the 27 days it was rented (3 days).
taxmap/pub17/p17-047.htm#en_us_publink1000284032

Example 3.(p71)

You own a condominium apartment in a resort area. You rented it at a fair rental price for a total of 170 days during the year. For 12 of those days, the tenant was not able to use the apartment and allowed you to use it even though you did not refund any of the rent. Your family actually used the apartment for 10 of those days. Therefore, the apartment is treated as having been rented for 160 (170 − 10) days. You figured 10% of the total days rented to others at a fair rental price is 16 days. Your family also used the apartment for 7 other days during the year.
You used the apartment as a home because you used it for personal purposes for 17 days. That is more than the greater of 14 days or 10% of the 160 days it was rented (16 days).
taxmap/pub17/p17-047.htm#en_us_publink1000284033

Minimal rental use.(p71)

For Use in Tax Year 2013
rule
If you use the dwelling unit as a home and you rent it less than 15 days during the year, that period is not treated as rental activity. See Used as a home but rented less than 15 days, later, for more information.
taxmap/pub17/p17-047.htm#en_us_publink1000284034

Limit on deductions.(p71)

For Use in Tax Year 2013
rule
Renting a dwelling unit that is considered a home is not a passive activity. Instead, if your rental expenses are more than your rental income, some or all of the excess expenses cannot be used to offset income from other sources. The excess expenses that cannot be used to offset income from other sources are carried forward to the next year and treated as rental expenses for the same property. Any expenses carried forward to the next year will be subject to any limits that apply for that year. This limitation will apply to expenses carried forward to another year even if you do not use the property as your home for that subsequent year.
To figure your deductible rental expenses for this year and any carryover to next year, use Worksheet 9-1.
taxmap/pub17/p17-047.htm#en_us_publink1000284035

Reporting Income and Deductions(p72)

For Use in Tax Year 2013
rule
taxmap/pub17/p17-047.htm#en_us_publink1000284036

Property not used for personal purposes.(p72)

For Use in Tax Year 2013
rule
If you do not use a dwelling unit for personal purposes, see How To Report Rental Income and Expenses, later, for how to report your rental income and expenses.
taxmap/pub17/p17-047.htm#en_us_publink1000284037

Property used for personal purposes.(p72)

For Use in Tax Year 2013
rule
If you do use a dwelling unit for personal purposes, then how you report your rental income and expenses depends on whether you used the dwelling unit as a home.
taxmap/pub17/p17-047.htm#en_us_publink1000284038
Not used as a home.(p72)
If you use a dwelling unit for personal purposes, but not as a home, report all the rental income in your income. Since you used the dwelling unit for personal purposes, you must divide your expenses between the rental use and the personal use as described earlier in Dividing Expenses. The expenses for personal use are not deductible as rental expenses.
Your deductible rental expenses can be more than your gross rental income; however, see Limits on Rental Losses, later.
taxmap/pub17/p17-047.htm#en_us_publink1000284039
Used as a home but rented less than 15 days.(p72)
If you use a dwelling unit as a home and you rent it less than 15 days during the year, its primary function is not considered to be rental and it should not be reported on Schedule E (Form 1040). You are not required to report the rental income and rental expenses from this activity. The expenses, including qualified mortgage interest, property taxes, and any qualified casualty loss will be reported as normally allowed on Schedule A (Form 1040). See the Instructions for Schedule A (Form 1040) for more information on deducting these expenses.
taxmap/pub17/p17-047.htm#en_us_publink1000284040
Used as a home and rented 15 days or more.(p72)
If you use a dwelling unit as a home and rent it 15 days or more during the year, include all your rental income in your income. Since you used the dwelling unit for personal purposes, you must divide your expenses between the rental use and the personal use as described earlier in Dividing Expenses. The expenses for personal use are not deductible as rental expenses.
If you had a net profit from renting the dwelling unit for the year (that is, if your rental income is more than the total of your rental expenses, including depreciation), deduct all of your rental expenses. You do not need to use Worksheet 9-1.
However, if you had a net loss from renting the dwelling unit for the year, your deduction for certain rental expenses is limited. To figure your deductible rental expenses and any carryover to next year, use Worksheet 9-1.