@eloisedaddy wrote:
When personal use exceeds the 14 day threshold the property is considered a residence.....
Correct: when the personal use exceeds the greater of 14 days or 10% of the number of days during the year that the home was rented at a fair rental.
@eloisedaddy wrote:
.....and the individual filer cannot claim the loss - passive or active. The loss is capped to the revenue collected.
Incorrect. If the expense is directly related to rental use and the net result is a loss, then the loss is not capped.
Here's an example (you can try this one yourself) that is extremely oversimplistic (and perhaps unrealistic but it illustrates my point):
Personal use = 30 days - Fair rental = 200 days. [personal days exceed 10% of the rental days]
Rental income = $10,000
Commissions = $2,000
Repairs during rental period = $5,000
Advertising = $2,000
Travel = $2,000
Net loss = ($1,000) which is nonpassive and 100% deductible from all other income.
