The 14-day / 10% test
A dwelling is treated as a residence if your personal use exceeds the greater of 14 days or 10% of the days it is rented at fair value. Cross that line and your deductions against rental income are limited — you generally cannot deduct a rental loss.
Splitting expenses
When there is both personal and rental use, you allocate expenses between the two. The rental share of mortgage interest, property tax, insurance, utilities, and depreciation is deductible against rental income; the personal share may be deductible only as an itemized deduction where allowed.
Three buckets to know
Rented fewer than 15 days: income is tax-free (the Augusta Rule). Mostly rental with little personal use: treated as a rental, losses may be allowed subject to passive rules. Mostly personal: treated as a residence, deductions capped at rental income. Track every night of use to land in the right bucket.
Frequently asked questions
What counts as a personal-use day?
Use by you, family members, or anyone paying less than fair rent. Days spent substantially full-time on repairs generally do not count.
Can I deduct a loss on a vacation rental?
Not if personal use makes it a residence — deductions are then capped at rental income. A true rental may allow losses subject to passive activity rules.
What if I rent fewer than 15 days?
Then the income is tax-free under Section 280A(g) and you do not deduct rental expenses for those days.
Sources
Educational information and estimates only. Not tax advice. Tax rules change and vary by situation; consult a qualified tax professional before acting.