An increasing number of vacationing American families are opting to rent vacation homes instead of booking hotels. Renting a home is typically less expensive than booking a hotel, and vacationers are usually happier with rental-home amenities than they are with hotel offerings.
As the growth of this new vacation rental trend continues, a profitable kind of opportunity is knocking louder and louder: renting your vacation home.
Brian Sharples, CEO of HomeAway, Inc.--the world's leading online marketplace for the vacation rental industry--says the average vacation rental property earns $28,000 a year. "Often times, that's enough extra income to cover expenses and the mortgage."
If you've ever wondered about renting your second home as a vacation destination, here are a few answers to some common questions about vacation home rental.
Where do I list my second home so vacationers will see it?
Vacation-rental websites such as HomeAway are the most effective means of listing your vacation home. Look for a website with good customer support, ease of use, and the ability to post plenty of high-resolution pictures of your property. Also, look for a site with a large number of visitors. By listing your property on a marketplace that's highly trafficked by families planning their vacations, you're maximizing your chances of renting your home.
What if I have a property to rent, but it isn't a house?
Many property renters find excellent sources of income in numerous kinds of property. Look for a vacation-rental site that allows you to list boats and yachts, villas, condos, cabins, cottages, and other properties. Some property owners around the world rent castles, barns (for families wanting more space on their vacation,) chalets, and yurts.
Aren't there only certain times of year I can rent my second home?
While spring and summer are certainly peak seasons for vacation home renting, there are effective ways to rent your property all year long. One important way to avoid seasonal gaps is to update your property listing with the vacation rental website you're using. Focus on selling the beautiful colors of the fall season, or the invigorating winter sports your property's location provides. Be sure to update the photos in your property listing to complement the descriptions of your winter wonderland. Also, different pricing strategies should be considered. For example, some renters charge an off-season monthly rate that's equal to what a peak-season weekly rate would cost.
What about taxes? Do I have to report my rental income on my tax return?
If you are renting your property for more than two weeks, then yes, you're required to report your rental income on your tax return. However, if your vacation home is "used as a home," and you rent the property fewer than 15 days out of the year, you do not need to report your rental income. You would instead deduct your expenses on Schedule A. For more information and some useful tips regarding taxes on vacation home rentals, check out 7 Tax Tips On Vacation Home Rentals.
What about other rules and regulations?
Yes, a bit of research will help you ensure success as a vacation home renter. Do you belong to a homeowner's association? You'll definitely want to take a look at your association's rules regarding short term home rentals. Is your home located in an area that would require you to collect hotel occupancy tax? If you're not sure, you should ask a CPA. Also keep in mind that in certain areas, you may be required to have a business license before you rent your property as a vacation home.
The popularity of renting vacation homes is increasing--not only in the US, but also worldwide. If you have a second home or other kind of property, you might be surprised at how easy it can be to rent to vacationing families. With a little planning, you could quickly uncover a second income that's been right under your nose for years.