time share

[POCAHONTAS]

so after reading the article that zee directed me to, and after reading this particular sentence:-

"Assuming that like most timeshare owners, you typically rent to tenants for one week or less at a time, your rentals don't qualify as a "rental" business. A special section of the Income Tax Regulations prohibits treating your loss as a “rental loss” if the average rental period for a particular tenant is seven days or less"

I have come to the conclusion that I report this rental income on line 21, other income on form 1040, since I cannot report it on schedule E.

does anyone disagree????

[S T]

Time Share

I have had one client that has this scenario and we receive a 1099 Rents each year. In my client's case, I do report on Schedule E it is more than average 7 day time share, and it does show a very small profit of approximately $ 100- $ 200 per year, after the allowable deductions. The property manager/time share people provide us with a print out each year. My client has a 14 day period and that is what he authorizes for the rental to one party.

So in my client's case it was better to report on Schedule E and calculate the depreciation as described in the article (which I had done).

I believe after all of the "gathering of information" it would be on a case by case basis knowing the facts and circumstances of each.

If you report the income on line 21 - Rents form 1099, then wouldn't you still be allowed to take the Property Tax (if any on Schedule A and also the Mortgage Interest (if qualified) on Shcedule A)?

Just so many scenarios and every situation is different depending on time, etc.

Sandy

[erchess]

Sch E

I don't think there is a problem putting rental income and no expenses on Sch E and I think the advantage of doing so is that the the IRS is less likely to write your client a letter wanting to know why there is no income given that there is a 1099A. On the other hand I don't think putting the income on Line 21 is clearly wrong.

[gkaiseril]

In Fudim, TC Memo 1994-235, the Tax Court disallowed losses from the rental of the timeshare condominiums. The taxpayer purchased a one-week interest in a timeshare condominium in Florida and a two-week interest in another Florida community. No one in the taxpayer's family used the time-shares and they were rented during the weeks available.The court noted that IRC §280A (the section that pertains to rental of vacation homes) states that use by the taxpayer includes "use by any other taxpayer who has an interest in such unit." The court stated that for purposes of determining whether the units were used for personal purposes, such use includes the individuals who owned the time-shares for the remainder of the year. The court disallowed the loss because the Fudims could not show that their condominiums were not used for personal purposes by any other person who had an interest in their units

It sounds like one reports the net income and net gains and eats the loss as non-deductible.