It depends. Mortgage interest and property taxes for a vacation property are prorated based on the relative number of rental and personal use days for the year. Depreciation is calculated in the same way, although you would report depreciation only for the rental use of the property.
You're considered to use a dwelling unit as a residence (second home) if you use it for personal purposes during the tax year for more than the greater of:
- 14 days, or
- 10% of the total days you rent it to others at a fair rental price.
However, if you use a dwelling unit as a home and you rent it less than 15 days during the year, its primary function is not considered to be a rental and it should not be reported on Schedule E. In this case, you are not required to report rental income on your tax return.
We recommend that you enter this information into TurboTax and allow the program to determine the outcome for you. Remember you can use TurboTax Online for free until you decide to file. Or you can install TurboTax on your desktop and create as many tax return scenarios as you wish.
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