Pied-à-terre for W2 job (tax deductible?) and STR

[Jordana Frost]

Hello!

A friend is exploring a potential professional opportunity that would require her to be in NYC about 2 days a week. To lessen the commute burden, she is thinking about investing in a small property about 1hr by train outside of NYC, that could serve as a pied-à-terre for her 1-2 nights a week and that could then double up as a short term rental the rest of the week. Local attractions include a thriving downtown, a college campus, the seashore, healthcare organizations. What would be the most tax-advantaged way of treating this property? Would it be a tax-deductible work-related expense for her W2 income  OR a business expense for her STR activity? Some kind of combination of the two? If it makes any difference, this property would be located about 100 miles (2-hour drive) away from her primary home. Thank you!  

[Nate Meeker]

@Jordana Frost 

Code Section 280a tells us that if you stay at a property you own during the tax year amounting to the greater of:

1. 14 days, OR
2. 10% of the total days you rent it to others at a fair rental price.

They will classify it as a personal residence. Losses will be disallowed and carried forward. Expenses must be allocated based on personal days occupied vs. tenant days occupied.

Friends or family renting below market value may be considered personal use days as well.