IRS Section 280A: Rental Days, Personal Use, and Home Office

IRS Section 280A rental property rules sort a home you both use and rent into one of three tax buckets based on how many days you occupy it personally versus how many days paying guests do. Rent for fewer than 15 days and the income is tax-free but no rental expenses are deductible. Cross that line while still using the place heavily yourself and your rental deductions are capped at rental income, so no tax loss is possible. Keep personal use minimal and the property is treated as a true rental, with losses allowed subject to the passive activity rules. Everything follows from the day count.

How Section 280A Counts Your Days

The statute applies to any dwelling unit with sleeping, cooking, and bathroom facilities — houses, condos, apartments, mobile homes, even boats. The one carve-out is a portion used exclusively as a hotel, motel, or inn, which is taxed as a commercial operation instead.

Every day of the year gets classified. A day counts as personal use if you, any co-owner, or certain family members (spouse, siblings, parents, children, grandchildren) occupy the property for any part of the day, even briefly, and even if the family member paid full rent. Swap arrangements where you use someone else’s place in exchange are personal use days. So is any day you rent to anyone for less than fair market value.

One exception softens the family rule: renting at a fair price to a family member who uses the property as their principal residence does not count as personal use.¹

A rental day is a day the property is rented at fair market value to someone outside those groups. Fair market value means the going rate for comparable properties in the same area during the same season.

Days spent working on the property don’t count as either personal use or rental days, provided you’re doing maintenance or repairs on a substantially full-time basis that day. Drive up Friday, paint the deck all day Saturday, fish on Sunday: Saturday is neither, Sunday is personal use.¹

Renting Fewer Than 15 Days: Tax-Free Income

If the property is rented for fewer than 15 days during the year, the rental income is not included in gross income at all. You don’t report it.¹

There is no dollar cap. Rent the house out for two weeks during a golf tournament or festival and collect $8,000, and none of it reaches your return. The trade-off: no rental expenses are deductible. No depreciation, no cleaning fees, no platform commissions, no advertising. Mortgage interest and property taxes still go on Schedule A the same way they would if you never rented.²

When the Property Is a Personal Residence With Rental Activity

Once you rent for 15 or more days, personal use becomes the pivot. If your personal use exceeds the greater of 14 days or 10% of the days rented at fair market value, the property is classified as a personal residence with rental activity.¹

Work through a beach house rented 90 days at market rate. Ten percent of 90 is 9 days, less than 14, so the threshold is 14. Personal use of 15 or more days puts you in this bucket. Rent it 200 days instead and the threshold climbs to 20 days (10% of 200), with 21 days of personal use triggering the limitation.

The consequence: your rental deductions cannot exceed your gross rental income. No tax loss is possible on this property. Congress wrote the rule to stop taxpayers from writing off vacation homes by renting them to friends for a few weekends.

The Three-Tier Deduction Order

Expenses get split between personal and rental use, then applied against rental income in a fixed sequence set out in IRS Publication 527:³

Tier 1 covers items deductible whether or not you rent — mortgage interest and real estate taxes. The rental share comes off rental income first, reducing the ceiling for everything that follows.
Tier 2 is operating expenses: utilities, insurance, maintenance, repairs, platform fees, and similar costs. The rental share is deductible only up to the rental income left after Tier 1.
Tier 3 is depreciation on the building and improvements. It goes last, allowed only against income remaining after Tiers 1 and 2.

For Tiers 2 and 3, the allocation ratio is rental days divided by total days used (rental plus personal). Tier 1 is where the fight is. The IRS applies the same rental-days-over-total-days-used formula. The Tax Court, in Bolton v. Commissioner, held that mortgage interest and property taxes should instead be allocated over the full 365-day year. The Bolton method pushes less interest and tax into the rental bucket, leaving more room under the income cap for operating expenses and depreciation. The IRS still disagrees with Bolton on audit, but the precedent stands, and the method you pick can meaningfully change the bottom line.

Carrying Unused Deductions Forward

Tier 2 or Tier 3 amounts you can’t deduct this year aren’t lost. They carry forward to the next year and are treated as rental expenses of the same property.¹ But the carryforward stays subject to the same income cap in future years, even if you later stop using the place as a residence. You can roll the balance forward indefinitely; it will never generate a loss against other income. It unlocks when rental income eventually exceeds current-year expenses, or when you sell.³

When the Property Is Treated as a True Rental

Keep personal use at or below the greater of 14 days or 10% of total rental days and Section 280A’s loss limitation drops away. Report income and expenses on Schedule E, and deductible expenses can exceed rental income, producing an actual tax loss.⁴ Expenses still get allocated between personal and rental use on the rental-days-over-total-days-used ratio, but the income ceiling is gone. Depreciation alone on a property worth several hundred thousand dollars can generate a substantial paper loss.

That paper loss is not automatically usable, though. Rental real estate is generally a passive activity under Section 469, and passive losses only offset passive income — not wages, business profits, or portfolio income.⁵

Two openings exist. If you actively participate in managing the rental — approving tenants, setting terms, authorizing repairs — you can deduct up to $25,000 of rental losses against ordinary income. That $25,000 allowance phases out as modified adjusted gross income moves from $100,000 to $150,000, disappearing entirely at the top.⁵ Separately, a taxpayer who qualifies as a real estate professional (more than half of total working hours in real property businesses with material participation, and more than 750 hours in the year) can treat rental losses as nonpassive with no dollar cap.

Short-Term Rentals: The Seven-Day Exception

Airbnb and Vrbo hosts sit outside the traditional Section 280A framework in a specific way. Under Treasury regulations, if the average guest stay is seven days or less, the activity is not treated as a rental activity at all for passive loss purposes.⁶

The property is treated as a trade or business instead. If you materially participate — handling bookings, guest communication, cleaning coordination — losses can potentially offset W-2 wages and other nonpassive income without real estate professional status. A related rule applies when the average stay is 30 days or less and you provide substantial services like daily housekeeping or meals: that hotel-like operation also escapes passive classification, but the income may be subject to self-employment tax, which conventional rental income avoids.

Home Office: The Same Statute, a Different Face

Section 280A is also the statute behind the home office deduction, which applies when you use part of your residence for your own trade or business rather than renting the unit to others. The space must be used exclusively and regularly for business, and it must be your principal place of business or a place where you regularly meet clients or customers.⁷ The simplified method gives $5 per square foot up to 300 square feet, capping the deduction at $1,500 with no depreciation or expense tracking. The actual expense method uses Form 8829 to allocate mortgage interest, utilities, insurance, repairs, and depreciation by business percentage, usually producing a larger deduction in exchange for thorough records.

Records the Rules Require

The whole framework depends on accurate day counts, and the burden of proof falls on you. The IRS doesn’t know whether your cousin stayed at the cabin in July, but if an auditor finds unreported personal use days on a property you claimed as a true rental, the reclassification flips every deduction against the income cap.

Keep a running log of every day the property is occupied: who was there, whether rent was charged, and how much. Save booking confirmations, lease agreements, and records of rent received from family members. For maintenance days you want excluded from the personal use count, document the work performed, the hours, and keep receipts, contractor invoices, and dated photos.

Expense records carry equal weight. Mortgage statements, utility bills, insurance premiums, repair receipts, and capital improvement invoices all feed the allocation math. The worksheets in Publication 527 walk through the calculations year by year, which is far easier than reconstructing three years of numbers under audit.³

1
Office of the Law Revision Counsel. 26 USC 280A – Disallowance of Certain Expenses in Connection With Business Use of Home, Rental of Vacation Homes, Etc.
2
Internal Revenue Service. Topic No. 415 Renting Residential and Vacation Property
3
Internal Revenue Service. Publication 527 Residential Rental Property
4
Internal Revenue Service. 2025 Instructions for Schedule E (Form 1040)
5
Office of the Law Revision Counsel. 26 USC 469 – Passive Activity Losses and Credits Limited
6
eCFR. 26 CFR 1.469-1T – General Rules (Temporary)
7
Internal Revenue Service. Topic No. 509 Business Use of Home