Question

Vacation home rules apply to which of the following taxpayers?
Mercy rented her beach house to tenants for 210 days during the year for fair rental value. She used the beach house herself for 45 days during the year.
Tom bought a new home. He converted his old home into a rental property. The tenants use it as their main home and Tom charges a fair rental value.
Amber rents an apartment all year to her mother at less than a fair rental value.
Xavier rents out a room in his house at a fair rental value. The room was rented out for the entire year.

Answer 1

Vacation-home (IRC §280A) rules apply to Mercy, Amber, and Xavier
- not Tom.

Brief reasoning:
- Mercy: Rented 210 days at fair value; personal use 45 days.
Threshold = greater of 14 days or 10% of 210 (=21) - 21. Personal
use (45) > 21 - vacation-home rules apply.
- Amber: Rented to her mother at less than fair rental value. Rental
to a relative below FMV counts as personal use (days rented at fair
value = 0), so threshold = 14 days and personal use > 14 -
vacation-home rules apply.
- Xavier: Rented a room at fair value for the entire year (365 days).
Threshold = greater of 14 or 10% of 365 (=36.5 - 37). He
personally occupies the residence, so personal use > 37 -
vacation-home rules apply.
- Tom: Converted his old home to a rental and has no personal use;
personal use = 0, so vacation-home rules do not apply.

Answer 2

Vacation-home (IRC §280A) rules apply to Mercy, Amber, and Xavier — not Tom.

Brief reasoning:
- Mercy: Rented 210 days at fair value; personal use 45 days. Threshold = greater of 14 days or 10% of 210 (=21) → 21. Personal use (45) > 21 → vacation‑home rules apply.
- Amber: Rented to her mother at less than fair rental value. Rental to a relative below FMV counts as personal use (days rented at fair value = 0), so threshold = 14 days and personal use > 14 → vacation‑home rules apply.
- Xavier: Rented a room at fair value for the entire year (365 days). Threshold = greater of 14 or 10% of 365 (=36.5 → 37). He personally occupies the residence, so personal use > 37 → vacation‑home rules apply.
- Tom: Converted his old home to a rental and has no personal use; personal use = 0, so vacation‑home rules do not apply.