The 14-Day Rule for Short-Term Rentals: How It Works
What this article is for
If you rent out a property you also use personally - a beach house, a mountain cabin, even your primary residence during a local event - the 14-day rule under IRC Section 280A will directly affect how much of that income you report and how many expenses you can deduct. This article breaks down both sides of the rule, shows you where hosts get tripped up, and gives you a clear framework for planning.
Two separate rules, one section of tax code
Most hosts have heard of "the 14-day rule" but treat it as a single concept. It's actually two distinct tests inside IRC Section 280A, and they work in opposite directions:
The tax-free rental test (Section 280A(g)): Rent your property for 14 days or fewer in a tax year and you report zero rental income. The money is completely excluded from gross income.
The personal use test (Section 280A(a)): If you personally use your property for more than 14 days - or more than 10% of the days it was rented at fair market value, whichever is greater - the IRS classifies it as a "vacation home" and your deductible rental expenses get capped.
Understanding which test applies to your situation (sometimes both apply) is the first step to not getting a surprise tax bill.
The tax-free rental: fewer than 15 days
Section 280A(g) is one of the few genuine tax-free provisions in the code. Here's how it works:
You rent the property for 14 days or fewer during the calendar year
You do not report the rental income anywhere on your return
You also do not deduct rental expenses like cleaning, management fees, or supplies
You can still deduct mortgage interest and property taxes on Schedule A as a personal residence
Example: The Augusta Rule applied
You own a home near a major golf tournament. You rent it for 10 nights at $1,200/night, collecting $12,000. You stayed at a hotel during the rental period.
Result: You report $0 in rental income. The $12,000 is excluded from your gross income entirely. You still deduct your mortgage interest on Schedule A like normal.
This is sometimes called the "Augusta Rule" because homeowners near Augusta National have used it for decades. It also applies to any property - a lake house, a ski condo, your primary residence - as long as the rental period stays at 14 days or under.
Important caveat: If you receive a Form 1099-K from Airbnb or Vrbo for this income, the IRS has a record of it. You'll want to note the exclusion correctly on your return (typically shown on Schedule 1 as a negative adjustment). Check with your CPA on the exact presentation - an unaddressed 1099-K can trigger a notice.
The vacation home trap: too many personal use days
This is where the rule backfires for most hosts.
If you personally use the property for more than the greater of:
14 days, or
10% of the days it was rented at fair market rate
...the IRS classifies it as a vacation home. That classification limits how much of your rental expenses you can deduct.
Under the vacation home rules, expenses must be allocated between rental and personal use days, and your rental deductions cannot exceed your rental income. Translation: you can't use the property to generate a tax loss that offsets your W-2 or business income.
Example: When personal use pushes you into vacation home territory
You own a beach house and rent it for 120 days in the year. You personally use it for 20 days.
10% of 120 rental days = 12 days
Greater of 14 days or 12 days = 14 days
You used it personally for 20 days, which exceeds 14
Result: Vacation home rules apply. Your rental expenses are prorated (120 rental days / 140 total days = ~86%), and your deductible rental losses are capped at zero - they cannot offset other income.
Now run the same numbers with 14 personal use days instead of 20:
14 personal days equals the threshold exactly
The rule triggers at more than 14 days, so 14 days of personal use keeps you just outside vacation home territory
You can deduct rental expenses without the cap, and a net loss may be deductible (subject to passive activity rules)
One day makes a real dollar difference.
What counts as a personal use day
The IRS definition of a personal use day is broader than most hosts expect. It includes:
Days you use the property yourself
Days any family member uses it (spouse, siblings, parents, children, grandchildren) - even if they pay fair market rent, in most cases
Days you rent it to anyone below fair market rent
Days the property is used by someone under a reciprocal arrangement (house swapping)
Repair and maintenance days generally do NOT count as personal use, as long as you're there primarily to work on the property and you can document it.
The deduction allocation math
If you're already in vacation home territory, expenses get split using a day-count ratio:
Rental use % = Rental days / (Rental days + Personal use days)
For a property rented 100 days and personally used 20 days (120 total use days):
Rental use % = 100/120 = 83.3%
83.3% of mortgage interest, property taxes, insurance, utilities, and depreciation can be allocated to the rental
The remaining 16.7% of mortgage interest and property taxes may be deductible on Schedule A
Rental expenses are then deducted in a specific order: first taxes and interest, then operating expenses, then depreciation - and the total cannot exceed rental income
Note: The Tax Court has approved a different allocation method (using total days in the year as the denominator rather than just use days) that often results in a larger rental deduction. The IRS uses the use-day method. Which method you use can meaningfully change your tax outcome. Discuss this with your CPA before filing.
When the 14-day rule genuinely backfires
Scenario 1: You accidentally cross from tax-free to fully taxable. You planned to rent your home for 14 days to keep income tax-free. A guest extends their stay by one day. Now you have 15 rental days, the Section 280A(g) exclusion disappears entirely, and 100% of the income is taxable. There's no partial exemption.
Scenario 2: You lose rental losses you were counting on. You buy a property expecting to use it for two weeks and rent it aggressively. You end up spending more personal days there than planned. Your rental loss evaporates due to vacation home rules - and it won't offset your other income.
Scenario 3: Mixed-use complicates your depreciation. If you're depreciating a vacation home under mixed-use rules and later sell it, only the rental-use portion of accumulated depreciation factors into your cost basis calculation. Keeping sloppy records makes this calculation painful and potentially costly.
What to do now
Count your days before year-end. Track rental days and personal use days separately in a spreadsheet or your property management software. Don't rely on your memory in April.
Decide your strategy early. If you want to keep income tax-free, set a hard cap of 14 rental days. If you want to deduct rental losses, keep personal use at 14 days or fewer (and below 10% of rental days).
Document maintenance days separately. If you're at the property to repair, clean, or manage - not to enjoy it - log dates, tasks, and receipts so those days don't get reclassified as personal use.
Get a 1099-K plan. If a platform issues you a 1099-K for income that qualifies for the Section 280A(g) exclusion, work with your CPA to handle it correctly on your return so it doesn't generate an IRS notice.
Review before you buy. If you're evaluating a new property you plan to use personally and rent, run the numbers on both scenarios before you close. The way you use the property determines the entire tax outcome.
The 14-day rule rewards intentional planning and punishes assumptions. A short conversation with a CPA who works with STR properties before the year ends can protect thousands of dollars in either tax-free income or deductible losses.
By Jessica Hudson, CPA - specializing in short-term rental tax, bookkeeping, and financial operations for vacation rental hosts.