A taxpayer owns a cottage at the beach for family vacations,but also rents it out for one month of the summer.Expenses attributable to the rental use of a taxpayer's vacation home are limited to the gross income generated by the property.The residence is considered to fall into the mixed personal and rental dimension.

Question

Quizplus · Accepted Answer

This is true as per the IRS rules. When a vacation home is used for both personal and rental purposes, expenses must be allocated based on the number of days used for each purpose. The total expenses cannot exceed the gross income earned from the rental use, as this would result in a loss that cannot be deducted from other income.

A Taxpayer Owns a Cottage at the Beach for Family