Dividing Expenses

If you use a dwelling unit for both rental and personal purposes, divide your expenses between the rental use and the personal use based on the number of days used for each purpose.

Publication 527 (2025) Chapter 5 Personal Use of Dwelling Unit (Including

Vacation Home)

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When dividing your expenses, follow these rules.

• Any day that the unit is rented at a fair rental price is a day of rental use even if you used the unit for personal purposes that day. (This rule doesn’t apply when determining whether you used the unit as a home.)

• Any day that the unit is available for rent but not actually rented isn’t a day of rental use.

Fair rental price. A fair rental price for your property is generally the amount of rent that a person who isn’t related to you would be willing to pay. The rent you charge isn’t a fair rental price if it is substantially less than the rents charged for other properties that are similar to your property in your area.

Ask yourself the following questions when comparing another property with yours.

• Is it used for the same purpose?

• Is it approximately the same size?

• Is it in approximately the same condition?

• Does it have similar furnishings?

• Is it in a similar location?

If any of the answers are no, the properties probably aren’t similar.

Example. Your beach cottage was available for rent from June 1 through August 31 (92 days). Except for the first week in August (7 days), when you were unable to find a renter, you rented the cottage at a fair rental price during that time. The person who rented the cottage for July allowed you to use it over the weekend (2 days) without any reduction in or refund of rent. Your family also used the cottage during the last 2 weeks of May (14 days). The cottage wasn’t used at all before May 17 or after August 31.

You figure the part of the cottage expenses to treat as rental expenses as follows.

• The cottage was used for rental a total of 85 days (92

• 7). The days it was available for rent but not rented (7 days) aren’t days of rental use. The July weekend (2 days) you used it is rental use because you received a fair rental price for the weekend.

• You used the cottage for personal purposes for 14 days (the last 2 weeks in May).

• The total use of the cottage was 99 days (14 days personal use + 85 days rental use).

• Your rental expenses are 85/99 (86%) of the cottage expenses.

Note: When determining whether you used the cottage as a home, the July weekend (2 days) you used it is considered personal use even though you received a fair rental price for the weekend. Therefore, you had 16 days of personal use and 83 days of rental use for this purpose. Because you used the cottage for personal purposes more than 14 days and more than 10% of the days of rental use (8 days), you used it as a home. If you have a

net loss, you may not be able to deduct all of the rental expenses. See Dwelling Unit Used as a Home next.