You don't have to record them if you only had 7 rental days. It is the Master's Rule. And the magic number is...14. Rent out a couch, a spare room or your whole house for a total of two weeks or less during the tax year and you'll pay nothing in federal taxes on the extra income.
One of the best Internal Revenue Service (IRS) breaks available, this tax break is sometimes known as "the Masters exemption" because so many people take advantage of it every year during the big annual golf tournament in Georgia.
It doesn't matter whether you earn $100 or $10,000 during those 14 days that you rent out space—you don't have to report the earnings on your taxes. However, to qualify, you must:
- Rent part or your entire house for no more than 14 days during the year
- Live in the house yourself for more than 14 days during the year or at least 10% of the time that you rent it to others.
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If you intend to report the income/expenses on Schedule E and start depreciating the rental property (this is a must for all landlords):
You should count the days the property was available to rent as well as the days it was actually rented if you are going to file a Schedule E for 2020. Rental days should include days the property was available for rent but not rented.
- Rental Property Dates & Numbers That Matter (assuming you did not ever use the property for personal use after you used it as a rental property). A day the property was available to rent = a rental day
Date of Conversion - If this was your primary residence before, then this date is the day AFTER you moved out.
In Service Date - This is the date a renter "could" have moved in. Usually, this date is the day you put the FOR RENT sign in the front yard, aka ''available date''.
Number of days Rented - the day count for this starts from the first day a renter "could" have moved in. That should be your "in service" date if you were asked for that. vacant periods between renters count also PROVIDED you did not live in the house for one single day during said period of vacancy.
Days of Personal Use - This number will be ZERO Don't count unrented days as personal days. Personal days are days you lived there after you started renting.
Business Use Percentage 100%. What you used it for prior to the date of conversion doesn't count. These rental dates refer to time when the property was a rental and if you purchased it in 2020 and never lived in the home, you have no personal usage of the home.
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