TaxesIntermediate6 min read

Renting out your home: the 14-day rule and short-term rental taxes

Rent your home a few days a year and the income can be completely tax-free — but cross a line and a maze of rental tax rules kicks in.

Short-term rentals turned millions of homeowners into part-time landlords, and the tax rules reward the casual and complicate the committed. At one extreme sits a genuinely magical provision — rent your home 14 days or fewer a year and the income is entirely tax-free. At the other, frequent renting drags you into the full apparatus of rental taxation: reporting income, allocating expenses, depreciation, and passive-loss rules. Where you land depends on two numbers: days rented and days of personal use.

The 14-day rule (the 'Augusta rule')

If you rent your personal residence for 14 days or fewer during the year, you don't report the rental income at all — it's completely tax-free, regardless of how much you charge. Nicknamed the 'Augusta rule' after homeowners who rent during the Masters golf tournament, it's a real, deliberate provision. Rent your house for a big local event or a busy week at a high nightly rate, stay under 15 rental days, and the IRS ignores the income. The tradeoff: you also can't deduct rental expenses for those days.

Tax-free income during a big event

The Owens family lives near a city hosting a major conference. They rent their home for 10 days at $500/night — $5,000 of income — and stay with relatives that week. Because they rented 14 days or fewer, the entire $5,000 is tax-free and doesn't even go on their return. Had they rented for 16 days, ALL of the income (not just the days over 14) becomes reportable, and the full set of rental rules applies. The 14-day line is a cliff, not a phase-in.

Once you cross 14 days: it's a rental

Rent more than 14 days and you report the income, but you also get to deduct rental expenses — and how much depends on your PERSONAL use. The dividing line: did you use the home personally for more than 14 days (or 10% of rental days, whichever is greater)? If yes, it's a 'personal residence with rental use,' and expenses are allocated between personal and rental days, with rental deductions generally capped at rental income (no loss allowed). If personal use is minimal, it's treated more like a pure rental property, where losses may be deductible subject to passive-activity rules.

Days rented	Personal use	Tax treatment
14 or fewer	Any	Income tax-free; no expense deduction
15+	More than 14 days / 10% of rental days	Mixed-use: allocate expenses, no rental loss
15+	Minimal personal use	Rental property: losses possible (passive rules)

How the IRS classifies your rental

Short-term rentals can trigger self-employment tax

Ordinary rental income is passive and NOT subject to self-employment tax. But short-term rentals where you provide 'substantial services' like a hotel — daily cleaning, meals, concierge, linens — can be reclassified as an active business, subjecting the income to the 15.3% self-employment tax and different reporting. The average nightly rate and level of service matter. If your rental looks more like a bed-and-breakfast than a lease, this is worth a CPA's review.

Expenses, depreciation, and the paperwork

Allocate expenses (mortgage interest, property tax, utilities, insurance, repairs) between personal and rental use, usually by days.
Depreciation: the rental-use portion of the home's structure is depreciated over 27.5 years — a valuable deduction, but it creates 'recapture' taxed later when you sell.
Cleaning fees, platform commissions (Airbnb/VRBO), supplies, and rental-specific costs are deductible against rental income.
Platforms issue a Form 1099-K reporting your gross rental receipts to the IRS, so the income is visible — report it.
Keep a clear log of rental days vs. personal days; the whole classification turns on those counts.

The bottom line

Rent your home 14 days or fewer a year and the income is entirely tax-free — a rare and deliberate gift in the code. Cross that line and you're a landlord: report the income, allocate expenses by personal-versus-rental days, navigate depreciation, and watch whether hotel-like services turn the income into self-employment income. The counts of rented and personal days drive everything, so track them precisely — and because depreciation recapture and the passive-loss and self-employment rules get complicated fast, a serious short-term rental is a good place to bring in a CPA.

Check your understanding

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You rent your home for 10 days during a big local event. How is the income taxed?

Not quite — try again.

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