Are you planning to rent out your residential property or vacation home?  If so, there are many things you need to consider other than the logistics of cleaning, maintenance, and service to the renter.

Receiving money for the use of a dwelling also used as your personal residence generally requires reporting the rental income on your tax return. Certain expenses related to renting your property become deductible to reduce the total amount of rental income that's subject to tax.

A dwelling unit, for tax purposes, is defined as a house, apartment, condominium, mobile home, boat, vacation home or similar property. It's possible to use more than one dwelling unit as a residence during the year.  It is considered to be used as a residence if you use it for personal purposes during the tax year for more than the greater of 14 days or 10% of the total days rented to others at a fair rental price. Rental expenses cannot be more than the rent received.

Personal use means use by the owner, owner’s family, friends, other property owners and their families. Personal use includes anyone paying less than a fair rental price.

Usually, rental income must be reported in full, and any expenses need to be divided between personal and business purposes. Special deduction limits apply.

Use Schedule E to report rental income and rental expenses on Supplemental Income and Loss. Rental income may also be subject to Net Investment Income Tax. Use Schedule A to report deductible expenses for personal use on Itemized Deductions. This includes such costs as mortgage interest, property taxes and casualty losses.

If the dwelling unit is rented out fewer than 15 days during the year, none of the rental income is reportable and none of the rental expenses are deductible. Find out more about these rules; see Publication 527, Residential Rental Property (Including Rental of Vacation Homes).