Timeshare rented less than 15 days - 1099 received

[David]

TP has two separate timeshare units. They have 2 weeks available for each unit which they rented all 14 days for each unit and did not use any of the units in 2011.

The management company sent a 1099 showing the combined rent for both units.

The IRS instructions say that if a TP rents their property less than 14 days, the income does not need to be reported. However, since the 1099 has to be reported, where in the ATX program is the income excluded?

Also since I have to report the 1099, can I show half the amount on each property in Sch E or will this cause a matching problem for the IRS?

Thanks for your help.

[Pacun]

It seems that you are renting your property 100% of your time for 2011. Remember that your time share is only available to you 14 days a year.

I would file one Sch E with two properties and split income and expenses. The Sch E will be OK because it will report the correct amount of income reported on the 1099. If you are concerned about matching, report the income only on one property using "income reported on 1099".

[David]

Thanks for your help with this.

I don't need to report expenses do I? Since each property was rented less than 15 days no income or expenses have to be reported.

But since a 1099 was issued, I am trying to figure out how to exclude the 1099 income. Can't I take it out on the income line with the description of "exluded income- rented less than 15 days". The TP's expenses don't offset the income.

How have any of you handled this type of situation?

Thanks.

[David]

OK, now the TP 'fessed up. It is not 2 timeshare units. They upgraded from 2 summer weeks to 2 winter weeks. The management company allowed them to keep the 2 summer weeks and also the 2 winter weeks which they were able to rent 100% of all four weeks. Getting 4 weeks is unusual and they should have only had 2 weeks.

So, how is this situation handled now on Sch E?

Thanks.

[DonnaA]

The income should be reported on Schedule E, with deductions for expenses and depreciation.

http://www.redweek.com/resources/articles/tax-aspects-renting-timeshare

[jainen]

>>IRS instructions say that if a TP rents their property less than 14 days, the income does not need to be reported.<<

Please give a citation for those instructions. Pub 527 says, "If you use the dwelling unit as a home and you

rent it fewer than 15 days... "

[DonnaA]

Pub 527 instructions define "Dwelling Unit Used as a Home" as follows:

"You use a dwelling unit as a home during the tax year if you use it for personal purposes more than the greater of:

1. 
   14 days, or
   
2. 
   10% of the total days it is rented to others at a fair rental price."
   

In this situation, the timeshares were not used as a home during the year, so the "fewer than 15 days" exception for minimal rental use does not apply.

[David]

sec. 1,750.05 states that in a time-share arrangement each owner of a unit is treated as having a continuing interest in the unit the entire year no matter how the interest is treated under local law, rather than limiting each owner's interest to the time that he is entitiled to control. Thus personal use by any owner of the unit is attributed to each owner, even though income and expenses remain individual items.

Does this change the personal use greater than 14 days answer?

[jainen]

>>sec. 1,750.05 states... <<<

sec. 1,750.05 of what?

>>Does this change the personal use greater than 14 days answer?<<

It kind of sets that answer aside and takes the discussion in a different direction.

[DonnaA]

It would change the personal use greater than 14 days answer. But if any other owners rented the unit, their rental days would also be attributed to the other owners and count toward the more or less than 15 days rented. In this case, you still could not exclude the income for minimal rental use. At least this is how I have always treated interval ownership, which is similar to, but not exactly the same as, timeshare ownership.

[HaroldinGeorgia]

Thanks, DonnaA, for the"Redweek" connection. It gives several very helpful articles on Timeshares.

I had been looking for such info for a week or more.