December 19, 2024 #1 Local News, Information and Event Source for the Century City/Westwood areas.

Renting Your Second Home

If you are among the many Americans who own a second home that you occasionally use as a vacation getaway, you may be leaving an important source of income untapped. It’s worth taking the time to understand the value of renting the property. Before you make any decision to become a “vacation landlord,” remember that some decisions are worth careful consideration.

Do-it-yourself or hire a team

First, consider how much of the burden you want to take on for yourself. Renting a property may create an income opportunity, but it requires work. If you are going to do it yourself, you’ll need to advertise the property, follow-up with potential renters, collect the rent, establish expectations for your renters and make sure the property is in good shape. You may want to hire someone for housekeeping services, yard care and maintenance work. But that comes at a cost and it still leaves work for you.

The alternative is to use a full-service management company that will handle many of the tasks related to booking and managing the property. Taking this route may cost you as much as 20 percent or more of the rental income generated by the property. You have to determine if that investment is worthwhile for you.

Tax considerations to keep in mind 

Another factor to consider is how much you plan to use your vacation home. There are tax ramifications based on the amount of time you live in the home versus the time you rent it out.

When you rent your home for 14 days or less in a year, rental expenses are not deductible, and the rental income is excluded from your gross income. 

If the property is rented for more than 14 days during the year, rental expenses are generally deductible. However, if you use the home as a personal residence for more than the greater of 14 days or 10 percent of the days it is rented during the year, then deductions are limited to gross rental income. Certain other rules may reduce or eliminate your ability to claim rental deductions. 

Keep in mind that state and local taxes may apply no matter what decision you make regarding the period your home is rented out. It is best to consult your tax advisor to understand all of the potential tax ramifications of your rental strategy.

Be prepared to share

When you rent your vacation home, the space is no longer just your own. Sharing your property with others will undoubtedly lead to additional wear-and-tear on your home. Make sure you limit the number of guests at any one time to an amount the home can reasonably accommodate. Spell out policies on smoking, pets and even a minimum age. The clearer your rules and expectations are for the renters, the less likely you are to encounter unpleasant surprises after renters have left the property. Do what you can to make the experience a positive one for renters to build repeat business and effective word-of-mouth marketing. 

When you choose to rent your vacation home, you are entering the hospitality business. Be sure you are prepared to meet the expectations of people who will be paying to stay in your home rather than in a hotel or other establishment. Careful thought before renting will also ensure you are prepared for how the changes will affect how and when you can use your vacation home.

Phil Decallejon, CFA® is a Financial Advisor with Orchard Financial Group, a private wealth advisory practice of Ameriprise Financial Services, LLC. in Los Angeles, CA.  He specializes in fee-based financial planning and asset management strategies and has been in practice for 9 years. To contact him, call 310.582.3500 | orchardfg.com | 12400 Wilshire Blvd, Suite 1210, Los Angeles, CA 90025.

Ameriprise Financial, Inc. and its affiliates do not offer tax or legal advice. Consumers should consult with their tax advisor or attorney regarding their specific situation.

Investment advisory products and services are made available through Ameriprise Financial Services, LLC, a registered investment adviser.

Investment products are not federally or FDIC-insured, are not deposits or obligations of, or guaranteed by any financial institution, and involve investment risks including possible loss of principal and fluctuation in value.

Ameriprise Financial Services, LLC. Member FINRA and SIPC.

© 2021 Ameriprise Financial, Inc. All rights reserved.

File #3942392 (Approved until 01/2024)

Related Posts

Alexander Brothers, Luxury Real Estate Moguls, Arrested on Sex Trafficking and Assault Charges

December 15, 2024

December 15, 2024

The FBI Asks For Public Assistance and Victims or Witnesses to Come Forward Tal and Oren Alexander, prominent luxury real...

Musician Lizzo Lists Stunning Beverly Hills Home for $15.99 Million

December 15, 2024

December 15, 2024

Modern Sanctuary Blends Luxury With Nature In Gated Community Grammy-winning musician Lizzo has put her Beverly Hills home on the...

LA City Council Approves New Housing Regulations Excluding Single-Family Zones

December 15, 2024

December 15, 2024

Rezoning Program Aims to Tackle Housing Shortages but Faces Feasibility Concerns The Los Angeles City Council voted unanimously on Tuesday...

Los Angeles Rents Among Nation’s Highest but Surprisingly Not the Most Expensive

December 8, 2024

December 8, 2024

Santa Monica, Los Angeles, and Irvine Are Part of the Top Ten As of December 2024, California’s rental market remains...

Future of Norms La Cienega to Be Decided at Cultural Heritage Commission Meeting

December 2, 2024

December 2, 2024

Plans to Open a Raising Cane’s on the Landmark Site to Be Reviewed This Week The future of Norms La...

LAPD Chase Ends in West Adams with Gunfire, Two Injured During Gun Battle

November 26, 2024

November 26, 2024

Domestic Violence Suspect Armed With Two Handguns Apprehended A high-speed police chase involving a domestic violence suspect ended in the...

Actress Zoe Saldana Sells Beverly Hills Mansion After Multiple Price Cuts

November 25, 2024

November 25, 2024

Saldana Sells Home for $10 Million, Millions Below the Original Asking Price Actress Zoe Saldana has sold her Beverly Hills...

Baby2Baby Gala Raises Record $17 Million to Support Families in Need

November 16, 2024

November 16, 2024

Event Honors Charlize Theron at the Pacific Design Center The Baby2Baby nonprofit organization held its annual gala on Saturday, Nov....

Court Halts Order for Expedited Veteran Housing in West LA, Citing VA’s Budget Constraints

November 13, 2024

November 13, 2024

Former Governor Arnold Schwarzenegger Criticizes the VA on Veterans Day The Ninth Circuit Court of Appeals has temporarily paused an...

Baby2Baby Gala Raises Record $17 Million to Support Families in Need

November 10, 2024

November 10, 2024

Event Honors Charlize Theron at the Pacific Design Center The Baby2Baby nonprofit organization held its annual gala on Saturday, Nov....

Elon Musk and Grimes House Hunt in Bel-Air for Property Amid Reports of “Family Compound”

November 7, 2024

November 7, 2024

Billionaire and His Former Partner Are Reportedly Searching for a Los Angeles Mansion Billionaire Elon Musk and his former partner,...

Police Seek Suspect in Vandalism of Jewish-Owned Businesses in L.A.’s Pico-Robertson Neighborhood

November 5, 2024

November 5, 2024

Authorities Investigate Series of Early Morning Attacks as Hate Crime Police are actively searching for a suspect accused of vandalizing...

Brentwood’s Beloved New York Bagel Co. to Close After 21 Years at Topa Town & Country Center

November 4, 2024

November 4, 2024

Local Favorite, Designed by Renowned Architect Fred Gehry, Must Vacate by December 31 By Dolores Quintana New York Bagel Co.,...

Judge Grants UCLA Temporary Return to Jackie Robinson Stadium After UCLA Promises to Pay More Rent

October 30, 2024

October 30, 2024

UCLA Regains Stadium Access Through 2025 Season, but Veterans’ Advocates Criticize Agreement Judge David O. Carter has reversed his previous...

Kanye West Buys $35 Million Beverly Park Mansion in Exclusive Beverly Hills Neighborhood

October 29, 2024

October 29, 2024

The 20,000-Square-Foot Estate Comes Just After West Sold His Gutted Malibu Home According to property records, rapper Kanye West, now...