Vacation Home and Short-Term Rental Tax Rules: 14 Days and 7 Days
The IRS rules for renting out a vacation home or short-term rental: the under-15-day rule, the 14-day personal use test and the 7-day average stay rule.
By Seayora Editorial Team · Published · Facts checked · 3 min read
Short answer: If you use a home yourself and rent it for fewer than 15 days in a year, you do not report the rental income at all. If you rent it longer, all the income is reported, and if your personal use is more than the greater of 14 days or 10% of the days rented at a fair price, the home counts as your residence and expenses must be divided and limited. Separately, an activity whose average guest stay is 7 days or less is not a “rental activity” under the passive loss rules.
Key takeaways
- Rented fewer than 15 days in a year: the income is not reported and the rental expenses are not deducted.
- Personal use above the greater of 14 days or 10% of fair-rental days makes the unit your residence for the year.
- Expenses are divided between rental and personal days, and rental deductions are limited when the unit is your residence.
- An average guest stay of 7 days or less takes the activity out of the passive “rental activity” rules.
What is the under-15-day rule?
If you use a dwelling unit as a home and rent it out for fewer than 15 days during the year, its primary function is not rental, and you do not report the rental income or deduct rental expenses on Schedule E (IRS Publication 527). Mortgage interest, property taxes and casualty losses are still deducted as usual on Schedule A if you itemize. Rent it 15 days or more and all of the rental income is reported.
When does a rental count as your home?
You use a dwelling unit as a home during the year if your personal use is more than the greater of 14 days or 10% of the total days it is rented to others at a fair rental price. Personal use generally includes days used by you, a family member or anyone paying less than a fair rent. If the unit counts as your home, you divide expenses between rental and personal use, and the rental is not a passive activity; instead, if rental expenses exceed rental income, some or all of the excess cannot offset other income and is carried forward to the next year as a rental expense for the same property (Publication 527, chapter 5).
| Situation | What you report |
|---|---|
| Rented fewer than 15 days, used as a home | No rental income or rental expenses on Schedule E |
| Rented 15 days or more, personal use above the greater of 14 days or 10% of rental days | All rental income; expenses divided, and excess rental expenses carried forward rather than offsetting other income |
| Rented 15 days or more, personal use at or below that threshold | All rental income; expenses divided by use, and the ordinary passive loss rules apply |
What is the 7-day rule for short-term rentals?
Under the passive activity rules, an activity is not a rental activity if the average period of customer use is 7 days or less, or 30 days or less when you provide significant personal services (IRS Publication 925). The average is the total days in all rental periods divided by the number of rentals. Because such an activity is not a rental activity, it is tested under the ordinary material participation rules rather than the rental rules: if you materially participate, a loss from it is not passive. Whether you materially participate depends on the hours and tests in Publication 925.
What records should a short-term host keep?
- A calendar of every rental period, its price and whether it was at a fair rental price.
- Every day of personal use, by you, family members or anyone paying less than fair rent.
- The hours you spend on the activity, if you rely on material participation.
- Separate records of expenses for the property, so they can be divided between rental and personal use.
Frequently asked questions
Do I pay tax on renting my home for a week during a big event?
If you use the home yourself and rent it for fewer than 15 days in the year, the rental income is not reported and the rental expenses are not deducted.
Does staying at my rental for a weekend of repairs count as personal use?
Publication 527 does not count a day spent working substantially full time repairing or maintaining the property as a day of personal use, even if family members use the property for recreation that day.
Is a short-term rental with 3-night stays a passive activity?
With an average stay of 7 days or less it is not a rental activity under the passive rules, so it is passive only if you do not materially participate.
Sources
- Publication 527 (2025), Residential Rental Property, chapter 5, Internal Revenue Service
- Publication 925 (2025), Passive Activity and At-Risk Rules, Internal Revenue Service
How Seayora helps
Property Tax Center: Schedule E by property from the books, so each rental’s income and expenses are ready when you work out these rules.
This article is general information, not tax advice. Tax rules change and your situation is your own, so confirm the treatment with a CPA or enrolled agent before you file.
How we write and check these guides: editorial standards.
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