I have a second home which I stayed in for 16 days. As such I believe the mortgage interest and property taxes are deductible in full. However, I also rented it out for 11 months at less than the fair market value (50%) as part of the purchase contract with the previous owner. As such, those are personal-use days. I believe I need to report the income from this as misc income/income from a not-for-profit activity AND I can deduct the utilities, mgt fees and repair bills up to the amount of the misc income. Any thoughts on this?
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That all sounds correct.
However, be aware that you must report ALL of your income, but the deductions are limited to the amount OVER 2% of your total income. In other words, the deductions for utilities, management expenses, and repairs may be significantly reduced or eliminated, but you will still be paying tax on the full amount of income.
As a side note, were you paying the utilities? Those are usually paid by the renter (but perhaps your contract says otherwise).
That all sounds correct.
However, be aware that you must report ALL of your income, but the deductions are limited to the amount OVER 2% of your total income. In other words, the deductions for utilities, management expenses, and repairs may be significantly reduced or eliminated, but you will still be paying tax on the full amount of income.
As a side note, were you paying the utilities? Those are usually paid by the renter (but perhaps your contract says otherwise).
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