Make Your Vacation Home Pay For Itself

Taxes are the other major consideration when determining the cost of renting your vacation house, and parsing the language is important. There are several categories to consider. If a home is rented for fewer than 15 days during the tax year, rental income does not need to be reported, and no rental expenses are deductible.

If you rent your house for 15 days or more, you must report all of your rental income. And if you make a net profit -- that is, if your income exceeds all expenses, including depreciation -- the expenses may be deducted. But you may not be able to deduct expenses if you experience a loss, however.

Keep in mind that any deductions you take must be divided into two percentages: the amount of time the owner used the house, and the number of days it was rented.

On the other hand, if you rent your vacation home for fewer than 15 days, you are not eligible to deduct any expenses as rental expenses, and cannot include rental income in your reported income.

Don't forget to factor in expenses not directly related to the house. There's the time and money it takes to clean a house for the next renters, or hiring a cleaning company to do the same. Other costs can include lawn care, security, condo association fees and insurance.

It's also important to be mindful of sales tax, which is required in most states. For around $100 a year, www.hotspottax.com will handle all hassles, since most popular vacation locations have at least two separate taxing authorities. (Florida, for example, charges a state sales tax, a county surtax and a county tourist development tax.)

With the appropriate planning, a vacation home is not only affordable and in financial reach, it can provides a healthy additional income.

Coming up next: the hottest vacation markets.