Short-Term Rentals in La Quinta. Did you know owning a Vacation Home in La Quinta has its own tax rules based on the Owners’ personal-use days and days the property is a rental?
If you own a second (vacation) home in the Palm Springs area and only are here during the winter months (and who wouldn’t want to live here then?), but also rent out some of the time, you may be liable to pay income tax on any rental income if you rent it more than 14 days out of the year.
According to the IRS, daily personal use is:
You or any other person who has an interest in it, unless you rent your interest to another owner as his or her main home and the other owner pays a fair rental price under a shared equity financing agreement.
A member of your family or of a family of any other person who has an interest in it, unless the family member uses it as his or her main home and pays a fair rental price
Anyone under an agreement that lets you use some other dwelling unit
Anyone at less than the fair rental price
However, if you rent it for special events like The American Express Golf Tournament or the BNP Paribas Open and only rent it out for fewer than 15 days, you don’t need to report any rental income.
According to the IRS, “If you use the dwelling unit for both rental and personal purposes, you generally must divide your total expenses between the rental use and the personal use based on the number of days used for each purpose. You won’t be able to deduct your rental expense in excess of the gross rental income limitation (your gross rental income less the rental portion of mortgage interest, real estate taxes, casualty losses, and rental expenses like realtors’ fees and advertising costs). However, you may be able to carry forward some of these rental expenses to the next year, subject to the gross rental income limitation for that year. If you itemize your deductions on Schedule A (Form 1040), Itemized Deductions, you may still be able to deduct your personal portion of mortgage interest, property taxes, casualty losses, and rental expenses from federally declared disasters on that schedule.”
Local Rules Regarding Short Term Rentals
HOWEVER, and this is a HUGE, HOWEVER, if you intend to rent your home as a short-term rental, each community in Coachella may have unique rules and restrictions. Be sure to check with the respective City before renting your home out. There have been reports where homes have had huge parties with a lot of noise, which is quite problematic.
There are ways Palm Desert residents can report noise violations by calling a Short-Term Rental Hotline or the Palm Desert Police Department.
It’s best to check out your options before ever renting out your home in Coachella Valley.
I’m always here to help you, too. Have a question? Contact me today!
UPDATE!!
The March 30th, 2022, Realtor Magazine had a very interesting article, “What Your Clients Need to Know about Short-Term Rentals“. The article listed 5 common myths about buying and owning a Short-Term rental listing it on Airbnb.
Myth #1: Any property will make a good STR.
Myth #2: Getting a property ready to rent out will be easy.
Myth #3: As long as I have general knowledge of how to operate a safe STR, I should be fine.
Myth #4: The local government has no idea if my property is an STR or my primary residence, so I don’t need to worry about regulations or taxes.
Myth #5: All I need is the standard preapproval and I can start looking for an STR.
It’s very much worth the read if you’re wanting purchase a home in the Desert and turn it into an Airbnb.
Click HERE to read the entire article.
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