The retired couple at a remote Skagit County lake had just rented out their waterfront cabin once the family getaway, now serving as their primary residence for the first time in the 42 years they have owned the property. Instead of leaving the place vacant when they went to their nieces July wedding in upstate New York, they pocketed $1,600, tax-free.
According to the most recent HomeAway Vacation Rental Marketplace Report, the couple is not alone. Approximately 15 percent of vacation rental owners have rented their primary residence to travelers, and the practice is becoming more common. A weakened economy, along with heavy demand for accommodations during popular short-term events like the presidential inauguration and the Super Bowl, have persuaded owners to move out and dust off the welcome mat for eager renters who have come to town.
With an increased demand for accommodations and limited hotel rooms during major events, HomeAway is seeing more homeowners renting their primary homes to travelers to make a little extra money, said Brian Sharples, HomeAways chief executive officer.
According to the Internal Revenue Service, owners can derive tax-free income from renting a home or getaway, provided it is rented out for 15 days or fewer and they dont claim any of the tax deductions typically allowed on rental property, such as for depreciation or maintenance. Once the 15-day threshold is reached, a different set of tax laws comes into play.
The survey also revealed that 31 percent of owners surveyed had the same number of bookings and 31 percent had a higher number of bookings this summer than a year ago. Forty-seven percent of the owners participating in the study charged guests the same rental rates as 2008 while 16 percent had higher rates this summer than the same time last year. Seventy-six percent of owners who offered renter incentives this summer plan to do so again.
The quarterly report found that second-home owners, including those who purchased homes for personal use, plan to use their homes fewer than 50 days a year.
About 12 percent of the owners surveyed say they are considering purchasing, or have already bought, another property this year. Of those who have bought or are considering buying, nearly half (46 percent) were motivated by a drop in home values and the ability to generate income by renting to vacationers.
HomeAway, based in Austin, Texas, operates several online owner-rental sites, including HomeAway.com, VacationRentals.com, Holiday-Rentals.co.uk and OwnersDirect.co.uk. HomeAway.com is the companys flagship site and hosts a global inventory of about 180,000 properties. It purchased VRBO.com, a pioneer in the online advertising of for-rent-by-owner properties, in November 2006 and continues to run the site as an independent brand. Approximately 85 percent of the sites 125,000 properties are based in the U.S.
The prime summer rental months of July and August seemed to be peculiar in many ways, especially in a shorter length of stay; the economy was the assumed culprit. (Fifty-four percent of HomeAway owners reported that the economy was the reason they needed to rent their vacation home to cover costs more now than in the past.) Long-term renters who planned ahead often got a break on traditional rates.
Alfred and Emily Glossbrenner, authors and consultants who self-published the popular vacation-rental book How to Make Your Vacation Property Work for You, said vacationers waited longer into the summer season this year to make their plans. The couple, who also run an informative Web site, www.fullybookedrentals.com, have long suggested that potential long-term renters approach owners during their down time to inquire about the best possible rates.
If you are interested in getting away, or are a potential landlord attempting to gauge market rental rates, some popular U.S. vacation rental sites include VRBO.com, www.greatrentals.com, www.a1vacations.com and www.cyberrentals.com. Each has its own advantages and features.
Tom Kellys book The New Reverse Mortgage Formula (John Wiley & Sons, New York) is available in many bookstores and on amazon.com.
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