What this line means
The number of days each property was rented at fair market value and the number of days you used it personally during the year. These two numbers determine whether your property qualifies as a rental, a personal residence, or a mixed-use property — and that classification controls which expenses you can deduct. Fair rental days are days the property was rented (or available for rent) at a price a stranger would pay. Personal use days include any day you, a family member, or anyone paying below-market rent used the property.
Does this apply to you?
- You rent out a property full-time to tenants and never use it personally
- You own a vacation home that you rent part of the year and use yourself part of the year
- You rent a room in your home or a guest house on your property
- You let a family member stay in your rental property, even temporarily
Easy to overlook
The 14-day / 10% rule changes everything If your personal use exceeds the greater of 14 days or 10% of fair rental days, the property is classified as a personal residence, not a rental. Rental expenses are limited to rental income — you cannot generate a deductible loss. A property rented for 200 days allows up to 20 personal use days before triggering this limit. A property rented for 100 days allows only 14. Exceeding the threshold by even one day eliminates loss deductibility for the entire year. 1 IRS Publication 527 — Residential Rental Property
Days spent on repairs count as neither rental nor personal use If you travel to your rental property to make repairs and spend the entire day working on the property, that day does not count as personal use even if you sleep there. But if you spend only part of the day on repairs and the rest relaxing, the IRS treats it as a personal use day. Keep a detailed log of repair activities with dates and hours worked. 2 IRS Schedule E instructions — Line 2 personal use days
Watch out for this
Counting days the property sat vacant as fair rental days. A day counts as a fair rental day only if the property was actively offered for rent at fair market value. Days between tenants when you did not advertise or list the property do not count. Inflating fair rental days to stay under the personal use threshold triggers scrutiny if the IRS requests documentation.
Footnotes
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IRS Publication 527, Residential Rental Property, Personal Use of Dwelling Unit. https://www.irs.gov/pub/irs-pdf/p527.pdf ↩
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IRS Schedule E (Form 1040) Instructions, Line 2. https://www.irs.gov/instructions/i1040se ↩