If you rent out your vacation house, don’t forget to give the IRS a cut

Personal finance

“In that event, you don’t get any deductions, but you also don’t pay tax on the income,” said Stephen Fishman, author of “Tax Guide for Short-Term Rentals.”

If your rental days are above the 14-day threshold, you need to report the income. The good news is that you also get some tax breaks to reduce the amount you pay taxes on.

For starters, the new tax law that took effect this year allows a 20 percent deduction for so-called pass-through businesses. For the vast majority of people who rent their property, income from that activity is “passed through” to the owner’s (or owners’) individual tax return.

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This means there’s a chance you could qualify for that 20 percent write-off on net rental income, as long your total income is below $157,500 ($315,000 for married couples who file joint tax returns). The deduction starts phasing out at that level and disappears altogether for incomes above $207,500 ($415,000 for joint filers).

However, consult with a tax advisor before assuming you qualify for that 20 percent break.

You also get to deduct a variety of expenses related to your rental activity. Costs such as local licensing, fees you pay to online platforms, advertising and marketing are all associated business costs that could be deductible.

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