Do you live near a lake or a popular festival that draws the attention of out-of-towners? Many local residents like to head out of town when a local festival or event draws in the tourists. If you're one of them, you might be able to rent your house for a few days and earn some tax-free income.
Taxpayers who own their own homes and rent their personal residences for less than 15 days per year receive tax-free income from the rental. To qualify for this tax-free treatment, during the year you must: rent out your home for 14 days or less and personally use the home for 15 days or more.
You are not allowed to deduct any rental-related expenses, such as getting the house professionally cleaned before or after your visitors arrive. However, you are allowed to deduct your mortgage interest and personal property taxes as usual on Schedule A for the entire year.