Deducting Rental Cabin (Interest on Loan vs Business)

[sassymom]

We purchased and completely furnished a cabin in Fall 2009. We rented it out twice in 2009.

I understand we can either deduct the interest on the loan or the business of renting it, but not both.

Do we have to have a business license to deduct this as a rental? Also, are we able to deduct the cost of furnishing it so we could rent it? Exactly what can we deduct if we claim this as a business?

Thanks

Sassy

[llworking]

We purchased and completely furnished a cabin in Fall 2009. We rented it out twice in 2009.

I understand we can either deduct the interest on the loan or the business of renting it, but not both.

Do we have to have a business license to deduct this as a rental? Also, are we able to deduct the cost of furnishing it so we could rent it? Exactly what can we deduct if we claim this as a business?

Thanks

Sassy

Do you also use the cabin? If so, how much?

[Bubba Jimmy]

You can deduct the interest on Schedule A if this is a 2nd home. If you rent it out, you have to file a Schedule E to report the rental income and the expenses that are allowed. If you use the cabin yourself in addition to renting it out that's a fairly complicated situation and there's no way anyone is going to type out all the rules that apply to such a situation. When I teach my basic income tax course, it is a topic that I spend about an hour and a half on. So if that is your case, then you either need to thoroughly read and understand IRS publications 527 and 946 (residential rentals and depreciation). Most people cannot just read these and understand them. So I would very strongly recommend that you pay a tax professional. You can use what they do as a guide for future years if you're able to follow all the rules in those publications, but I would not suggest doing this yourself the first time.

[sassymom]

Thanks to both of you!!! I decided to get a tax professional you are right it is very confusing!!