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Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 14838
Experience:  15years with H & R Block. Divisional leader, Instructor
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My sister-in-law owns a vacation rental at the beach. It is

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My sister-in-law owns a vacation rental at the beach. It is an income property for them, rented as a weekly vacation rental. I would like to rent it at full rental price. I would go through the agency that rents it out and not her personally.
She tells me that If I rent her unit, it will be considered a week of "owners use" for tax purposes, since we are related. Is this correct?
Submitted: 1 year ago.
Category: Tax
Expert:  Robin D. replied 1 year ago.
Hello,Your sister-in-law is thinking about the rules that would limit her from claiming the expenses.If you have any personal use of a dwelling unit (including a vacation home) that you rent, you must divide your expenses between rental use and personal use.The full rules are below:What is a day of personal use? A day of personal use of a dwelling unit is any day that the unit is used by any of the following persons.You or any other person who owns an interest in it, unless you rent it to another owner as his or her main home under a shared equity financing agreement (defined later). A member of your family or a member of the family of any other person who owns an interest in it, unless the family member uses the dwelling unit as his or her main home and pays a fair rental price. Family includes only your spouse, brothers and sisters, half-brothers and half-sisters, ancestors (parents, grandparents, etc.), and lineal descendants (children, grandchildren, etc.).Anyone under an arrangement that lets you use some other dwelling unit.Anyone at less than a fair rental price. If you are paying the regular price this would not count against her.
Expert:  Robin D. replied 1 year ago.
FREE EXTRA INFORMATION FOR YOU You can tell your sister in law that this is in IRS Publication 527http://www.irs.gov/publications/p527/ch05.html#en_US_2014_publink1000285457Chapter 5
Customer: replied 1 year ago.
What do you mean expenses? How does she lose money wirh me renting vs a stranger? I do not understand your answer. It is the same rhetoric I found when googling. What is the financial implications for her??
Customer: replied 1 year ago.
Just checking if u received my response.
Customer: replied 1 year ago.
Robin,
I see that you are online. If you cannot answer my question with details, please let me know so I may try someone elsewhere.
Susan
Customer: replied 1 year ago.
Dthis is not working for me. I do not consider that you answered my question.
I need to know what financial consequences my sister-in-law would have if i rented her vacation rental at full price. I already saw the IRS publication, but it is unclear.
1) sister-in-law, not sister
2)what expenses are you talking about. I would be renting one week, paying, so do not understand expenses she would incur.
3) it seemed you were saying that she would not have to count this weel towards owners use. Is that correct?
4) can you answer these questions?
Expert:  Robin D. replied 1 year ago.
Your sister- in- law would not have any financial consequences as long as you rent for the same price as the public rents the property for.1) sister-in-law, not sister (This makes no difference inher situation. As long as you pay the price as any other person would pay.2)what expenses are you talking about. I would be renting one week, paying, so do not understand expenses she would incur. The expenses are what she is allowed to claim on her rental property. If she let you stay there for free or reduced price then she can not claim all her rental expenses as she normally does.3) it seemed you were saying that she would not have to count this weel towards owners use. Is that correct? YES, the fact that you are paying the same price as anyone else means this is not counted as her using for her personal time.4) can you answer these questions? Yes

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