Vacation Home Converted to Short Term Rental

Forum|Forum|11 months ago
April 8, 2025
2 replies
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Let's say I purchased a vacation home in 2006. The sale price was $110K, $10K of which was attributed to "land," and between the down payment, mortgage, and closing, I had to bring $120K to the table (round numbers to make it simple). Our family grew up spending our vacation time there all these years. Kids grew up and away.... [wipes tears]

In 2024, I started renting it out as a short-term rental through AirBnB and the like because now I spend my vacation time in my kids' basements so I can see my grandchildren. So, the condo was put "in service" in 2024. What do I put as my cost basis? Would it be my purchase price from 2006?

Many thanks for your expert replies.

DavidD66

Yes. It would be your original purchase price plus any closing costs (other than taxes, interest, HOA fees, etc.) plus the costs of any improvements. Improvements would be renovations you did. I would also included assessments by the condo association for improvements.

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TexiRicanAuthor

Thank you so much! Just to clarify, I wouldn't have to calculate depreciation for the years we used it for personal use, correct? I only start calculating (ahem... let TurboTax calculate) depreciation starting in 2024, which is when we started to rent it out.