Using a Vacation Home on the Lake, Mountain or Beach as a Rental Property

A vacation home is a wonderful investment. Years of enjoyment and family memories will be made there. But if it’s used as a vacation home only and no one lives there full time, it can be a financial drain. Maintenance costs and utilities, not to mention the mortgage itself, can really add up. People who want to be able to afford their luxury homes in the Triad, NC, and a vacation home as well, could consider renting out the second home when it’s not in use. But before doing so, here are some things the homeowner should know about renting out a vacation home.

1. Tax implications. The way you use a vacation home, how long you stay, how long you rent it out, all affect the way you file your taxes.

• If you rent out the property for 14 days or less it is considered a second home and not a rental, meaning the income will not have to be reported to the IRS.
• If you rent out the property for 15 days or more and use it for less than 14 days or 10% of the days rented it is considered a rental property and all income from rent must be reported to the IRS. The rental expenses can be deducted from the owner’s taxes.
• If you use the property for more than 14 days or 10% of the total days rented it is considered a personal residence and will be taxed as such.

The regulations from the IRS are very particular, but there is one possible “loophole.” The owner may stay in the home longer than 14 days while performing maintenance, as long as that is the primary use during that time, and the property can still be considered a rental.

2. Rental success depends on a few important elements:

• One possible issue with renting out your vacation home is that peak dates for renters may be the same dates you wish to use the home. You may want to consider using the home more in the off season to make enough rental income.
• It’s important to set rental rates carefully so that they are comparable to similar homes in the area and still high enough to generate income.
• Property management. An expert property manager with experience renting luxury homes in vacation areas can help to market the property and handle the rental process from scheduling to collecting fees. This takes the hassle out of renting your home, allowing you to enjoy the home when you can, and collect income when you can’t.

Keep your Luxury Home in the Triad, NC, and Afford a Vacation Home Too

If you have dreamed of owning a luxury home in the Triad area, NC, and a lake, mountain or beach house or other vacation home, it is possible. Renting out your vacation home can bring in enough income for maintenance and the mortgage payment, making it possible for you to afford a second home.

Smith Marketing with Allen Tate Realtors® can help you find the home you want in the Triad area and help you find a REALTOR® in the vacation area you want.