taxes on week rented out

[rapmarks]

If the duration of the rental is more than seven days, there would be no Section 1.469-1T(e)(3)(ii)(A) of the Temporary Income Tax Regulations and IRS Letter Ruling #9505002 (which state that a 7 day or less rental that results in a loss is, by definition, a passive activity loss) would not come into play so it would be a plain vanilla, ordinary loss that could be taken or included in your that year's taxes.

And, according to Dave M, CPA and timeshare owner and TUG contributor, if the Section 1.469-1T(e)(3)(ii)(A) of the Temporary Income Tax Regulations and IRS Letter Ruling #9505002 7 day limitation DOES apply:

...Thus, you're pretty much stuck with carrying over such losses to use against positive taxable income from your rental activities in future years. You can also deduct any carryover losses related to a rental property in the year you sell that timeshare.

So I don't know why he assumed you had to wait till "future years" to offset possible taxable income from rental activities with net timeshare rental losses. It seems clear from what Dave M wrote (...It falls into the passive activity loss rules of §469 of the Internal Revenue Code. Those rules prohibit deducting such losses except against other passive activity income. Such income is narrowly defined and doesn't include, for example, dividends, interest or other investment income....) that you can use those "passive activity" losses anytime you earn positive timeshare rental net income. So perhaps the Tax Assistance program, in denying you the right to deduct any timeshare passive activity losses while simultaneously having you pay taxes on the timeshare passive activity net income you earned MAY BE incorrect. At least according to Dave M and §469 of the Internal Revenue Code.

And Dave M's interpretation of the pertinent tax code provisions makes sense. If you have both timeshare taxable income on one timeshare you rented, and also have a net loss on another timeshare you rented, why couldn't you offset one with the other? The nature of the income and loss, i.e timeshare rental income and loss, i.e., timeshare passive activity income and timeshare passive activity loss, is exactly the same.

So you rent and do your own taxes and are speaking from your experiences?
I have not seen a post by Dave M in many years, but I do know that tax laws were changed a few years ago and they limited deductible advantages.
But guess what, when I submit my tax return, I do it based on professional advice, not a stranger on the internet.

 

[andre10056]

I agree with you 100%. I've never incurred a loss on any timeshare I ever rented but this is a discussion forum discussing an issue that may pertain now or in the future to any and all timeshare owners who rent their timeshares. I'm not advising anyone on what to do, merely reviewing what professionals have stated. The discussion is more along the lines of "issues" to be aware of. And I would suggest that you familarize yourself with those issues if a timeshare rental loss may be in your future so that you can point your tax consultant in the right direction of the appropriate tax code provisions as have been revealed above...because the average tax professional likely has no clue about any of the above as pertains to timeshares.

 

[chapjim]

Whether to report it or not often has to do with whether your rentals are trackable. If you rent out to your friends directly and collect money via wire or a check at cost, you are unlikely to be audited by IRS. If you list on redweek and do a rental through them, then your rental is trackable.

It's okay to hold up that liquor store as long as you think you won't get caught, right?

 

[VacationForever]

Still a crime to not report this, even if it’s unlikely you will be caught.

But if after expenses it is $0, there is nothing to report anyway.

 

[chapjim]

But if after expenses it is $0, there is nothing to report anyway.

Not so! You have income to report. You may also have related expenses that may or may not offset your income. But you always report the income.

 

[silentg]

Usually rent a timeshare for the amount of maintenance fee, or at least less than the resort would charge someone to rent.

 

[andre10056]

Usually rent a timeshare for the amount of maintenance fee, or at least less than the resort would charge someone to rent.

I would agree that's always the ultimate rental objective and, indeed, I won't own any timeshare that I can't pretty easily rent for more than MFs if it becomes necessary to do so, but that's not always possible. As proved by pretty much EVERYONE who rents last minute via TUG for $800 or less, sometimes much less.

 

[Fido Chuckwagon]

Not so! You have income to report. You may also have related expenses that may or may not offset your income. But you always report the income.

Yes, it’s this.

 

[rapmarks]

Not so! You have income to report. You may also have related expenses that may or may not offset your income. But you always report the income.

Yes, you have to report the income
IRS may be aware of the income, but they are not aware of your expenses .
IRS assumes the income is profit, until you show your expenses
You protect yourself by reporting the income, then showing your expenses

 

[gumbow719]

If you rent a week out, how do you calculate your taxable income?
I am on points system.
Do you subtract the amount paid in maintenance fees as an expense?
Do you subtract any advertising fees?

No taxes on rental week up to 14 days. Anything over 14 days pay taxes

 

[chapjim]

No taxes on rental week up to 14 days. Anything over 14 days pay taxes

On what do you base this statement?

 

[dioxide45]

No taxes on rental week up to 14 days. Anything over 14 days pay taxes

I think you are referring to renting out your residence for 14 days or less, but it also requires that you occupied the residence for 14 days or more.

• Under the 14-day rule, you don't report any of the income you earn from a short-term rental, as long as you rent the property (or room) for no more than 14 days during the year, and you use the property yourself for 14 days or more during the year.

10 Tax Tips for Airbnb, HomeAway & VRBO Vacation Rentals

Turning your home into a vacation rental can be a lucrative venture. But as with any new income stream, it can subject you to more taxes depending on how often you rent it out. In order to get the most out of your short-term rental, it's important to understand the potential tax implications...

turbotax.intuit.com

 

[chapjim]

I think you are referring to renting out your residence for 14 days or less, but it also requires that you occupied the residence for 14 days or more.

• Under the 14-day rule, you don't report any of the income you earn from a short-term rental, as long as you rent the property (or room) for no more than 14 days during the year, and you use the property yourself for 14 days or more during the year.

10 Tax Tips for Airbnb, HomeAway & VRBO Vacation Rentals

Turning your home into a vacation rental can be a lucrative venture. But as with any new income stream, it can subject you to more taxes depending on how often you rent it out. In order to get the most out of your short-term rental, it's important to understand the potential tax implications...

turbotax.intuit.com

Does this apply to timeshare rentals? The whole section mentions home and residence. I don't think a timeshare qualifies as a home or residence.

If I'm wrong, I do a whole lot of reporting that I don't need to do!

Topic no. 415, Renting residential and vacation property | Internal Revenue Service

Topic No. 415 Renting Residential and Vacation Property

www.irs.gov

 

[WaikikiFirst]

I don't see why you'd get in trouble by virtue of not knowing that, even if you incur a loss, you can't deduct it because of...whatever. Seems like no one could expect such a counter-intuitive result.

The old "ignorance of the rules is not a free pass" rule. Nothing counter-intuitive about it.
I can come up with a few examples that would show what strange situations that approach would lead to.

 

[VacationForever]

I think you are referring to renting out your residence for 14 days or less, but it also requires that you occupied the residence for 14 days or more.

• Under the 14-day rule, you don't report any of the income you earn from a short-term rental, as long as you rent the property (or room) for no more than 14 days during the year, and you use the property yourself for 14 days or more during the year.

10 Tax Tips for Airbnb, HomeAway & VRBO Vacation Rentals

Turning your home into a vacation rental can be a lucrative venture. But as with any new income stream, it can subject you to more taxes depending on how often you rent it out. In order to get the most out of your short-term rental, it's important to understand the potential tax implications...

turbotax.intuit.com

I have read this many times and I think I even found a section in Redweek that interprets that as long as you stay longer than 14 days at your timeshare property (X) and rents out 14 days or less (X), you do not require to report. The issue is that many people rent out their timeshare at property X but stay at property Y, and that disqualifies them from the exemption. https://www.redweek.com/resources/articles/tax-aspects-renting-timeshare

 

[Fido Chuckwagon]

No taxes on rental week up to 14 days. Anything over 14 days pay taxes

This is incorrect.

 

[dioxide45]

I have read this many times and I think I even found a section in Redweek that interprets that as long as you stay longer than 14 days at your timeshare property (X) and rents out 14 days or less (X), you do not require to report. The issue is that many people rent out their timeshare at property X but stay at property Y, and that disqualifies them from the exemption. https://www.redweek.com/resources/articles/tax-aspects-renting-timeshare

I'm no CPA, obvious, but I don't think the IRS has specific publications related to timeshares. I would think they treat them as a secondary residence for tax purposes.

 

[VacationForever]

I'm no CPA, obvious, but I don't think the IRS has specific publications related to timeshares. I would think they treat them as a secondary residence for tax purposes.

If you read the Q&A further down, it should apply to timeshare provided that you own at least 4 weeks at the same resort, if you were to rent out 2 weeks and stay there for the other 2 weeks.

 

[dioxide45]

If you read the Q&A further down, it should apply to timeshare provided that you own at least 4 weeks at the same resort, if you were to rent out 2 weeks and stay there for the other 2 weeks.

I suspect some people don't really have issues even if they rent a single week and don't stay 14 or more themselves. They may not be getting a 1099 and not even reporting. So they think the <15 day rule applies when it really doesn't.