Tax Court reminds us what renting "for profit" means

[Michael Plaks]

In a recent Langston decision (T.C. Memo 2019-19), the court sided with the IRS in deciding that the taxpayer did NOT actually convert their house from personal residence to a rental property. No losses allowed as a result.

The "creative" couple rented their fancy house, a former residence, to their friend for 5 days a month, $500/month while finishing a $1 mil rehab. Never marketed it as a rental, either. Predictably, it did not hold water.

Lesson, quoting one commentator: "Rent to a real tenant for a real time period and a real amount of money." I agree.

A more thorough analysis can be found here.