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shared vacation home rental

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What is the name of your state? Delaware
Two married couples share ownership of a vacation home as tenants in common. One couple want to rent out more than 14 days of their time. Other couple won't rent out any of their time. Renting couple say there will be no tax liability for non-renting couple. Is that correct?
 


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loku

Guest
TWO MARRIED COUPLES SHARE OWNERSHIP OF A VACATION HOME AS TENANTS IN COMMON. ONE COUPLE WANT TO RENT OUT MORE THAN 14 DAYS OF THEIR TIME. OTHER COUPLE WON'T RENT OUT ANY OF THEIR TIME. RENTING COUPLE SAY THERE WILL BE NO TAX LIABILITY FOR NON-RENTING COUPLE. IS THAT CORRECT?


That is correct: the non-renting couple will get no rental income from this and therefore, the non-renting couple will have no tax liability for the rental.
 
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If the renting couple deduct depreciation of the house as a deduction from the rental, would that affect the basis of the house when it is sold? Would depreciation be deducted from basis even if it were not deducted from income? Does that complicate tax issues for non-renting couple?
 
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loku

Guest
If the house is sold, the gain or loss would be determined as if it were two houses—one belonging to each couple; therefore, the depreciation would not effect the gain or loss of the non-renting couple.
 

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