Question

Several years ago, Junior acquired a home that he vacationed in part of the time and rented out part of the time. During the current year Junior:

• Personally stayed in the home for 17 days.

• Rented it to his favorite brother at a discount for 23 days.

• Rented it to his least favorite brother for nine days at the full market rate.

• Rented it to his friend at a discounted rate for ten days.

• Rented the home to third parties for 50 days at the market rate.

• Did repair and maintenance work on the home for three days.

• Marketed the property and made it available for rent for 204 days during the year (in addition to the days
mentioned above).

How many days of personal use and how many days of rental use did Junior experience on the property during the year?

Answer 1

Junior experienced 40 days of personal use (17 days of personal stay + 23 days renting to his favorite brother at a discount) and 59 days of rental use (9 days renting to his least favorite brother + 50 days to third parties) on his property during the year.

Step-by-step explanation:

To determine the number of days of personal use and rental use that Junior experienced on his property during the year, we must review the specifics of each use.

According to the Internal Revenue Service (IRS) guidelines, personal use includes the days Junior used the home for personal purposes, which is 17 days. Additionally, rent to relatives at less than fair market value is considered personal use unless the property is being rented as a main home. Therefore, renting to his favorite brother for 23 days at a discount also counts as personal use. However, the days spent doing maintenance are not counted as personal use if the primary purpose was to maintain the rental property, not as a day of leisure or vacation for the owner. That leaves us with 17 (personal vacation) + 23 (discount rent to favorite brother) = 40 days of personal use.

For rental use, we include all days the property was actually rented at a fair market rate, which sums up to 59 days (9 days to the least favorite brother + 50 days to third parties). Renting out to his friend at a discounted rate does not count because the rent was not at the market rate.