# How do I report a timeshare rental on income tax



## shmoore (Mar 22, 2010)

We rented our week through a resort and got a 1099-misc from them. Where do I enter this on our income tax return?. Using TurboTax it took a huge amount out of our refund. We had about $1400 for the rental and it did not allow us to deduct our $600 maintenance fee. of the $800 we cleared it wanted $400 for taxes....surely I did something wrong.

Thanks in advance for your help.


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## Luanne (Mar 22, 2010)

We have an accountant do our taxes.  So I'm really not sure how he's handled it the years we've rented.  However, I didn't think you could ever use maintenance fees as a deduction, only the property tax.


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## DeniseM (Mar 22, 2010)

See the Tax article on the TUG Advice page.


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## IngridN (Mar 22, 2010)

Maintenance fees are deductible against your rental income as are the property taxes and any commissions to rent it for you. Don't forget advertising fees if you rented it yourself.

Ingrid


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## Dave M (Mar 22, 2010)

Turbotaxx has a specific section for reporting rental income. That same section will prompt you for expenses that should offset the income. If you enter the MFs properly, the deduction will be allowed. You are also entitled to depreciation, which might well wipe out all of the taxable rental income. See the article that Denise referred you to.


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## BellaWyn (Mar 22, 2010)

Schedule E


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## NWL (Mar 22, 2010)

DeniseM said:


> See the Tax article on the TUG Advice page.



Can you please direct me to this article.  I seem to be "forum challenged" today.   

Cheers!

Never mind.  I finally figured it out!


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## csudell (Mar 22, 2010)

deleted message


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## Dave M (Mar 22, 2010)

Even if the rental is for less than 14 days, you must still report it. The rule you refer to applies only to "vacation homes". Those rules don't apply unless the home (or condo or timeshare) is used for personal purposes for at least 15 days, something that wouldn't happen with a one-week ownership.

The link to the tax article referred to above is here.


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## BevL (Mar 22, 2010)

NWL said:


> Can you please direct me to this article.  I seem to be "forum challenged" today.
> 
> Cheers!
> 
> Never mind.  I finally figured it out!



For anybody else and since it's "that" time of year:

http://www.tug2.net/advice/TUG_Taxes_and_Timeshares.htm


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## Mel (Mar 23, 2010)

Dave M said:


> Even if the rental is for less than 14 days, you must still report it. The rule you refer to applies only to "vacation homes". Those rules don't apply unless the home (or condo or timeshare) is used for personal purposes for at least 15 days, something that wouldn't happen with a one-week ownership.
> 
> The link to the tax article referred to above is here.



Dave, I have a tax client who had the IRS rule otherwise when he tried to claim a passive loss.  Their resoning was that it did in fact qualify as a vacation home because it was deeded as an undivided interest.  The property was owner by 50 owners for the course of a year, and if even 5 or 6 owners used or exchanged their weeks, those weeks qualified as personal use for all 50 owners, and would easily qualify as more than 10% of the days rented as well as more than 15 days.  If the timeshare isn't deeded, I'm not sure it really even belongs on a schedule E.

I think the problem is moot for anyone renting through an agency, because the income has already been reported via the 1099, and must appear on the tax return somewhere.


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## Dave M (Mar 23, 2010)

That's different from what I am saying. I agree that a passive loss is not deductible on a timeshare rental, even if it would otherwise qualify because the taxpayer is under the threshhold for adjusted gross income. That's because a timeshare rental doesn't qualify as "rental income" for passive loss purposes and is treated the same way as a loss from a limited partnership would be treated. Here's the wording on that topic from my article on timeshare taxes (from the TUG Advice section):





> Assuming that like most timeshare owners, you typically rent to tenants for one week or less at a time, your rentals don't qualify as a "rental" business. A special section of the Income Tax Regulations prohibits treating your loss as a “rental loss” if the average rental period for a particular tenant is seven days or less.
> 
> Even most tax advisors are not aware of this rule. Your tax advisor can review §1.469-1T(e)(3)(ii)(A) of the Temporary Income Tax Regulations. This regulation is also referred to in IRS Letter Ruling #9505002, which gives an indication of the IRS position on this issue as it relates to timeshares, as discussed above.
> 
> ...


So the IRS got to the correct result in your client's situation, even if for the wrong reason.


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## Iwant2gonow (Mar 25, 2010)

My accountant told me that I only had to report a rental if I rented more than 14 days within one year.


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## Mel (Mar 25, 2010)

That's kind of iffy.

There is a special rule if you use a dwelling as a home and rent it for fewer than 15 days.  It sounds like your accountant is using this rule.  The problem is the classification of use as a home.  To qualify you would need to use the timeshare for 10% of the number of days it is rented out.  In order for you to qualify that way, you have to consider the days used by the other owners.  

Per IRS:

A day of personal use of a dwelling unit is any day that it is used by: 

1 - You or any other person who has an interest in it, unless you rent your interest to another owner as his or her main home under a shared equity financing agreement; (any other owners who use their weeks)

2 - A member of your family or of a family of any other person who has an interest in it, unless the family member uses it as his or her main home and pays a fair rental price; (friends or family of any other owners who use their weeks)

3 - Anyone under an agreement that lets you use some other dwelling unit; (any other owners who exchanges their weeks)

or 4 - Anyone at less than fair rental price. (if any other owners who rent just to cover part of their fees, but less than typical rental)

Once you do that, you should also consider that days it is rented out by other owners.  If more than one other owner rents the unit, it isn't fewer than 15 days.  You can get away with not reporting anything (if it hasn't already been reported on a 1099 by a rental agent) but if you are audited, and the IRS finds out about the rental income, you will probably have to pay taxes on your profit.  Also realize that if you report it one year because you used a rental agent, the IRS may look for it on future returns (particularly if they audit).


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## Dave M (Mar 25, 2010)

Your accountant is apparently not familiar with Proposed Regulation 1.280A-3(f) which applies an aggregation rule to timeshare ownership, thus making the assumption that all 51 or 52 owners of your unit rent for more a combined total of 14 days. Accordingly, the rental income should be reported. See Mel's post and my following post for more on that and other details that many tax advisors don't know on this topic.


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