If you own a vacation home or rent out a second property, there’s a tax case you should know about—one that will keep you on the right side of the IRS rules.  Claiming your vacation property as a rental does have tax benefits in that you can deduct expenses associated with the property, but to do that you need to know the rules:

Charles M. Akers owned a mountain cabin in Alpine, California, which he rented out through a property management company. He attempted to deduct over $20,000 in repair and maintenance expenses on his tax return—but the court denied the deductions. Why? He didn’t follow the IRS rules for proving material participation or distinguishing between personal and rental use.

What Went Wrong?

Although Mr. Akers claimed he spent time maintaining the cabin, he had no logs, receipts, or documentation to back up those claims. Worse, the court reclassified his “maintenance visits” as personal use days—because he couldn’t prove otherwise. As a result,

• the IRS deemed the cabin a personal residence (not a rental),
• the limited rental use (12 days) triggered the 15-day rule, making it a non-taxable event for the rent income received which was good, but
• he lost all potential rental deductions.

How to Avoid the Same Mistake

If you rent out a vacation home or second property—even part-time—be sure to

• keep detailed records of every maintenance task (trip) and/or business-related visit where you use the property;
• track time spent by others, such as cleaners or repair services;
• understand IRS thresholds for personal use of rental properties and when you have to claim the rent income (e.g., the 14-day/10% rule, the 15-day rental rule); and
• plan your use and rentals proactively—not after the fact.

Plan Ahead

This case reinforces a critical point: proactive tax planning is essential. The IRS requires documentation, not good intentions. Whether your goal is to deduct expenses, reduce income, or stay compliant, clear records and strategy are your best defense.