Newbie - Is personal use counted by days or nights?

Question

I'm under contract for a ski-in/ski-out condo in Keystone Colorado. I'm going to use the condo primarily as a STR property, but would like to maximize personal use without going over the 14 days/10% IRS rule. I've read lots of short articles about this rule, but none of these articles really seem comprehensive and I want to make sure that I am following the rule properly. Does anyone know of a really thorough discussion of this? I want to be very confident of how the rules work on this before I start promising days to family members.

1.) Everything says "14 days," but STRs are rented by the night. If I use the property from 6 PM one night to 8 AM the next morning, does that count as 2 days against my 14? And on the other side, if I arrive at the property at 8 AM, then leave at 6 PM the next day, does that count as 2 days against my 14?

2.) What counts as work on the property to justify using it? When I close on the property, I'm going to repaint it, install furniture, etc. If I take a short hike during lunch, I'm sure that's not going to disqualify that day as a work day. Where's the line with this? If I drive up there to replace a broken microwave, then ski the rest of the day, spend the night, and leave the next morning, can I still count that as maintenance?

3.) Can I simply rent the property from myself (at the fair market price) for additional days? Obviously, I'd have to pay tax on that, but I can imagine situations where it's cheaper to pay those taxes than to lose the preferential tax treatment of the property.

Bruce Woodruff · Answer

IMO, you're being too exact with a very inexact situation. Your tax person is going to ask you about days of use....no one cares if you're perfectly correct as long as you're close....

Tanner Pile · Answer

@Stephen SavageWho would you be reporting this to? That is who I would ask about for how these are tracked. I would do if you're there for the majority for the day it counts as a day. But if it is a STR going off of nights would work too. Comes down to who you report this too. I would count work as hours but into doing the work. So if the painting takes 2 hours that's 2 hours. I would also track driving time to the property because to me that still counts as work to get to the property in my eyes. I would ask an accountant on the third one. You could possibly rent it from one of your businesses to work around that for up to 10 days a year tax free if used for a company event. I would ask a tax expert on that too.

John Malone · Answer

@Stephen Savage you cannot rent from yourself, no. Well you CAN but that’s a circular self rental. A night = a day yes

Michael Baum · Answer

Exactly what @Bruce Woodruff said. I just track my work time there and call it good. My CPA never even asks as he knows I spend the requisite amount of time required.

JD Martin · Answer

First thing to remember is you can do anything you want until the IRS audits you. Then you better have good answers for what you did.1. No. It counts as one day. Each day you are there counts as a day. If you're there and no one can use the property then it's a day. If someone can use the property it's not a day. 2. Work - anything that's substantial that is repairing, maintaining or improving the property. In your example, if the broken microwave is an over-the-range model that takes several hours to remove the old one and put the new one in, yes that's work. If it's a counter model that takes 30 seconds to swap out, that's not work. 3. No. 4. If these answers were simple and generic, you wouldn't need to be here asking other people for the answers. Simple generic answers usually can be answered by anyone with common sense. What you're looking for is confirmation from a forum of strangers that what you plan to do will pass muster with the IRS. Without specific examples no one is going to be able to answer those questions because everything is at the interpretation of the IRS according to tax law.

Stephen Savage · Answer

It seems strange that such a common question which would be relevant to hundreds of thousands of Americans isn't readily available. Does everyone just expect to pay a CPA for answers to simple and generic questions like this?Further googling has shown me that the issue is that IRS rules and legislation isn't clear on some of the issues related to STRs. It sounds like there's an attitude of "let the courts sort it out," so there ends up with several sources and opinions of information rather than standardized rules.

Sarah Kensinger · Answer

I would take all these questions to the CPA/accountant/attorney you have hired to help get the benefits of owning a STR. The law is tricky to say the least and it's much better to ask someone who knows it well, then a variety of people who may have never looked at it.