Question

When renting a vacation home to a relative, the days used will be considered 'rental days' as long as the relatives are charged the fair market rental value. The days used will count as 'personal use' if the rental fee is below the fair market value. True or false?

Answer 1

The statement is true; days are considered 'rental days' when relatives are charged fair market value for renting a vacation home, and as 'personal use' if charged below this value.

Step-by-step explanation:

The statement is true. When you rent a vacation home to a relative, for the days to be considered rental days, the relatives must be charged a rent that is at least equal to the fair market rental value. If the rent charged to your relatives is less than the fair market value, then those days are counted as personal use days in terms of tax considerations. Generally, personal use days do not count towards days of rental for tax purposes, which can affect the tax deductions you may qualify for.