Vacation home rules apply to which of the following taxpayers?

Question

Amber 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.
Greg bought a new home. He converted his old home into a rental property. The tenants use it as their main home and Greg charges a fair rental value.
Lenore rents an apartment all year to her mother at less than a fair rental value.
Mike 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 rules apply to taxpayers who rent out a residence for a part of the year and personally use it for a portion of that same year. These rules determine how rental income and expenses are reported and can affect deductions claimed.

1. Amber (rented her beach house for 210 days and used it for 45 days): Amber's situation qualifies under vacation home rules because she rented the property out for a significant portion of the year and also used it personally.

2. Greg (converted his old home into a rental property): Since Greg is renting out his old home as a full-time rental property and does not use it for personal purposes, it does not fall under the vacation home rules. Instead, it's considered a rental property.

3. Lenore (rents an apartment to her mother at less than fair rental value): Lenore's scenario does not qualify under vacation home rules since she rents the property out at less than fair market value, which means it does not count as rental activity for tax purposes.

4. Mike (rents out a room in his house for the entire year at fair rental value): Mike's situation does not fall under vacation home rules because he is renting out part of his primary residence rather than a separate vacation home. Instead, the rental income and expenses will be reported differently, as it's treated like a rental property.

In summary, only Amber is subject to vacation home rules based on the provided scenarios.