Tax Aspects of Renting Your Home for a Day or Two

NOTE: I wrote this post in 2013, so be aware of its age. However, the information is still valid, and RAGBRAI still happens every July in Iowa.

—–

It’s RAGBRAI time again in Iowa — the Des Moines Register’s Annual Great Bike Ride Across Iowa. 

If RAGBRAI comes to your town and you rent out your house to bikers for a night or two, what are the tax implications?

The answer is simple: there are none.

Tax law says that if you rent out a dwelling for less than 15 days during the year, you don’t have to report any of the income. Period. (See Section 280A(g) of the Internal Revenue Code and Proposed Regulation 1.280A-3(b).)

It doesn’t matter how much rent you charge. If it’s rented for 14 days or less, you don’t have to report the income.

The tradeoff is that you also don’t get to take any deductions relating to the rental of the property.

Example:

John rents out his house for two nights during a festival taking place in his town. He takes in $2,000 in rental income (it’s a popular festival and John has a nice house). John doesn’t have to report the $2,000 on his tax return. However, he also gets no deductions on his tax return relating to the rental of his house.

Image courtesy of tungphoto / FreeDigitalPhotos.net