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Updated almost 5 years ago,
Questions: Tax Strategies for Vacation Home converted to STR?
I bought a lake house in July 2016 with the original intent of renting it out and then possibly retiring there in 10 years. I didn't actually rent it until 2019.
During 2019 it rented for a total of 52 STR days (19 bookings during the year) through VRBO. Total rental income was below $15K. I have the following questions while preparing my taxes since I am trying to figure out if it is beneficial to continue renting it on a STR basis once I report the income and have to pay taxes on it. Since the income received was below $20K,
According to the IRS, in my scenario I should not exceed 14 days of personal use based on the 52 days it was actually rented? Is that correct? (greater than 10% or 14 days)
Since I exceeded the 14 days of rental, do I report all 52 days of income or are the first 14 days not taxable?
If I/we travel back and forth to do our own cleaning, repairs, management etc in between bookings, is that considered personal use while I'm there?
What do I need for documentation purposes pertaining to personal use for the benefit of the IRS so I don't exceed my 14 days of personal use? I want to make sure I take full advantage of all tax savings/deductions as a STR and don't want to jeopardize a potential audit.
Do I report this on a schedule E with my other long term rentals? (I did not receive a 1099K from VRBO)
Has anyone decided not to continue with STR and convert back to a vacation home for personal use? What are the tax ramifications in doing so?
I may be overthinking all of this, but I like to have all my ducks in a row and keep as much money in my pockets as possible. Any/all input would be greatly appreciated. I'm fairly well versed on reporting long term rental income, but I'm just new to the STR industry and would really like input from those who have already experienced this, before I reach out to a tax specialist.
Thanks so much!