Martha rents part of her personal residence in the summer for 3 weeks for $3,000. Anne rents all of her personal residence for one week in December for $2,500. Anne is not required to include the $2,500 in her gross income whereas Martha is required to include the $3,000 in her gross income.

Question

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The difference in tax treatment is due to the fact that Martha is renting out only a part of her personal residence (which is considered a rental property), whereas Anne is renting out her entire personal residence for a short period of time (which is considered a temporary rental). The rules for rental income and expenses for a rental property are different from those for a temporary rental. Therefore, Martha is required to include the rental income in her gross income, but Anne is not.

Martha Rents Part of Her Personal Residence in the Summer