Final answer:
When a vacation home is both a personal and rental residence, maintenance and utility expenses can be deducted but only up to the amount of rental income, if personal use does not exceed 14 days or 10% of the total rental days.
Step-by-step explanation:
The subject of the question concerns the tax implications of owning a vacation home that is used for both personal and rental purposes. According to IRS guidelines, taxpayers must allocate expenses between personal use and rental use.
If you rent out your home for more than 14 days per year, you must report the rental income. However, you can deduct rental expenses such as maintenance and utility expenses, proportionate to the time the property was rented out.
If personal use exceeds the greater of 14 days or 10% of the total rental days, the vacation home is considered a personal residence and the deductible rental expenses cannot exceed the rental income.
This signifies that maintenance and utility expenses could potentially be claimed, but only up to the amount of rental income generated from the property. Expenses exceeding rental income cannot be deducted under this condition.