Can our recently inherited timeshare qualify for the Augusta rule if rented less than 14 days?

What about the management fees? If the timeshare management company took fees out before sending payment, can those still be excluded or do you have to report the full 1099 amount and then back out exactly that amount?

For the management fees, you should report the full amount shown on the 1099 as your gross income. Even though the management company might have withheld their fees before paying you, the 1099 reflects the full rental amount paid by the renter. When you exclude the income under the Augusta rule, you would exclude the entire gross amount shown on the 1099. You don't need to worry about claiming the management fees as separate expenses since you're excluding all the income anyway.

Did they help with state tax issues too? My state seems to have different rules than federal for short-term rentals and I'm confused about how the Augusta rule applies on my state return.

How long did it take to get an answer? I'm literally filing tomorrow and just realized I might have been reporting my timeshare rentals wrong for years.

Yes, they definitely addressed state tax implications as well. They explained that while the Augusta rule is a federal provision, most states follow federal rules for defining taxable income. They did point out that some states have additional reporting requirements for short-term rentals regardless of the federal exclusion. I got my detailed analysis back in about 30 minutes. Their system processed my documents really quickly, which was surprising given how detailed the guidance was. The explanation included specific instructions for both federal and state returns.

Does this actually work? I've tried calling the IRS dozens of times and either get disconnected or told to call back later. Seems too good to be true that a service could somehow get through when no one else can.

Sounds like a scam honestly. Why would anybody be able to get through to the IRS faster than anyone else? They're probably just taking your money and you're still waiting the same amount of time.

Yes, it absolutely works. It's not that they have some special direct line to the IRS. What they do is use technology to continuously call and navigate the phone tree for you, then connect you when they reach a human. The IRS phone system kicks people off when volume is high, but their system just keeps trying. It's definitely not a scam. The reason it works is simple - they have systems that can keep dialing and navigating the IRS phone menu repeatedly until they get through. I was skeptical too until I tried it. I was working on other things and then got a call when they had an agent ready. No magic, just persistent technology doing the frustrating work for you.

Do maintenance fees for the timeshare count as "expenses related to the rental" that you can't deduct if using Augusta rule? I've been deducting my $1,200 annual maintenance fee proportionally for the days I rent it out.

If you're using the Augusta rule to exclude the rental income, you cannot deduct any expenses related to the rental - including the proportional maintenance fees. That's the trade-off with this exclusion. When you choose to exclude the income under the Augusta rule, you give up the ability to deduct any expenses associated with generating that rental income. If your maintenance fees are significant, you might want to calculate whether you'd be better off reporting the income and deducting the expenses instead of using the exclusion.

That's common. I'm a preparer and many of my colleagues aren't familiar with some of these less common provisions. The Augusta rule (Section 280A(g)) isn't something that comes up in every client situation, so some preparers never encounter it. Might be worth sharing the actual tax code reference with them so they can research it themselves.

Thank you for mentioning the stepped-up basis! That's such an important point that often gets overlooked with inherited property. Since the timeshare's basis is now the fair market value at the time of inheritance, if @a40ed0a06b6f decides to sell it later, they won't owe capital gains on any appreciation that occurred during their grandmother's ownership. This could be a significant tax advantage depending on how long she owned it and how much timeshare values have changed in that area of Florida.

This is really helpful advice about documentation! I'm curious about the marketing fees you mentioned - if the management company automatically deducted those from our rental payment before sending us the net amount, but the 1099 shows the gross rental income (before their fees), does that create any issues with using the Augusta rule? I want to make sure we're handling this correctly since it sounds like any claimed expenses could disqualify us from the exclusion.

You're asking exactly the right questions! If the management company deducted their fees before paying you but the 1099 shows the gross amount, you're actually in perfect shape for the Augusta rule. Here's why: The key is that YOU didn't claim any deductions on your tax return. The management fees were taken by the company as part of their service - you never reported those as expenses or deductions on your return. The 1099 showing the gross amount is actually helpful because it means you can exclude that full gross amount under IRC 280A(g). Think of it this way: the renter paid $3,200 total, the management company kept their cut, and you received the net. But since you're excluding all the income anyway under Augusta rule, it doesn't matter that they kept fees - you're not trying to deduct those fees yourself. Just make sure when you report this that you exclude the full $3,200 shown on the 1099, not just the net amount you received. This keeps everything clean and matches what the IRS has on file. You're definitely still eligible for the Augusta rule exclusion!

This is really reassuring to hear from someone who's been through the same situation! I had no idea about reporting it on Schedule E and then subtracting it out - that's such important information that could have saved me from potential headaches later. Quick question about the documentation you mentioned: did you just keep a simple calendar marking the rental days, or did you need more detailed records like rental agreements and payment confirmations? I want to make sure I'm keeping the right documentation in case the IRS ever has questions about whether we truly stayed under the 14-day limit. Also, did you have any issues with your state taxes? I'm wondering if Florida has any different rules that might affect how we report this, even though we're excluding it federally.

Great question about documentation! I kept a simple calendar marking the rental days, plus I saved copies of the rental agreement from the management company and the payment confirmations they sent me. The calendar was probably the most important piece since it clearly showed the 10 rental days versus the few personal use days we had. For Florida specifically, you're in luck - Florida doesn't have a state income tax, so you won't need to worry about any different state reporting requirements for this rental income. That makes things much simpler compared to other states that might have their own rules about short-term rental reporting. The federal Augusta rule exclusion should be all you need to handle. Just make sure to keep that documentation for at least 3 years in case of any IRS questions, though with such a clear-cut case like yours (only 10 days, well under the limit), I doubt you'd have any issues.

Great questions! For your 2023 situation with the $2,100 rental income, filing an amended return (Form 1040X) could definitely be worth it depending on your tax bracket. If you're in the 22% bracket, you'd save around $460 in federal taxes - probably worth the effort for most people. The amended return process for Augusta rule exclusions is pretty straightforward and shouldn't increase audit risk since you're actually reducing your reported income with proper documentation. Regarding your future strategy question, you're absolutely right to think about this! With timeshare maintenance fees often running $1,000-$2,000+ annually, the math can definitely favor reporting income and taking deductions instead of using Augusta rule exclusion. Here's a quick way to think about it: If your timeshare maintenance fees are $1,500/year and you rent 10 days out of 365, you could potentially deduct about $41 in maintenance fees ($1,500 × 10/365). Add other potential deductions like management fees, advertising, etc. and you might come out ahead by reporting the income and claiming expenses, especially if you're in a lower tax bracket. I'd recommend calculating both scenarios each year to see which gives you the better tax outcome!

Thank you so much for the professional perspective! As someone new to inheriting property, I really appreciate the CPA insight. The point about documenting the fair market value at the date of death is something I hadn't even considered - that could definitely be important down the road. I'm curious about the statement you mentioned adding to the additional information section. Is that something the IRS specifically looks for, or just a best practice to make the return clearer? I want to make sure I'm being as transparent as possible about using the Augusta rule exclusion, especially since this is my first time dealing with rental income from an inherited timeshare. Also, when you mention "converting it to more extensive rental use," what would be the tax implications if we decided to rent it out for more than 14 days in future years? Would we lose any benefits from having used the Augusta rule in previous years?