AT&T Pro-Am house rental

Q : We just rented out our residence for the week of the AT&T Pro-Am golf tournament for $5,000. What are our tax consequences?

A : Good news! The Internal Revenue Code (Code Sec. 280A(g)) provides for a special rule for certain rental use as follows:

….if a dwelling unit is used during the taxable year by a taxpayer as a residence and such dwelling unit is actually rented for less than 15 days during the taxable year, then1. No deduction otherwise allowable under this chapter because of the rental use of such dwelling unit shall be allowed, and

2. The income derived from such use for the taxable year shall not be included in the gross income of such taxpayer under section 61.

In other words, if the property is rented for fewer than 15 days during the year, no deductions attributable to such rental (commissions, utilities, repairs, etc.) are allowable and no rental income is includible in gross income.

The Internal Revenue Code does not mention any dollar amounts or dollar limits for this generous income tax treatment. Therefore, it appears that your $8,500 rental income for the week of the tournament (assuming your total 2022 rentals will be less than 15 days) will be tax-free.

Many years ago, I lived in Los Angeles in an area where movies and television shows were often filmed. It was quite common to hear stories of residential homes being rented by studios for a film shoot at exorbitant rates. The lucky homeowners often received a taxfree windfall based upon this apparent tax loophole.

Please note that you need to check with your local city and county to determine if there are any licensing or registration requirements, fees, and possible Transient Occupancy Taxes due for short term rentals.