Barbara McMullen is one of six siblings - and it's her turn to host the family reunion. Her Michigan-bred gang will invade the final two weeks of August, taking in the local landmarks the first week then gathering at a nearby lake for the second half of the trip.
"We have a sort of standing agreement with a few of our lake neighbors to share cabins when big events are on the calendar,'' Turner said. "We don't charge a fee in return for being able to use one another's place down the road. Most of the time, when you give enough notice, it works out great for everyone.''
The McMullen crowd has grown over the past few years with more of the adult children having children of their own. Because more lake homes were needed, the McMullens coaxed four other lake families into renting out their waterfront retreats. These people typically do not rent out their lakefront homes, yet decided to alter that policy for the McMullen Family Reunion.
If you are wondering about tax reporting, the four families receiving a cash reimbursement will not have to report the income to the Internal Revenue Service. Owners can derive tax-free income from renting their home or getaway, provided they rent it out for 15 days or fewer and don't claim any of the tax deductions typically allowed on rental property such as for depreciation or maintenance. This option can come in handy for folks who do not want to be in the rental game, yet occasionally find they could rent their place.
Now, let's switch gears and consider the family cabin as mostly a rental. The tax rules change if the getaway house becomes a designated rental or investment property and the owner is clearly in the full-time landlord game. Under current federal tax laws, the owner can still use a rental vacation home for 14 days or 10 percent of the amount of time the house is rented, whichever is greater, without jeopardizing its status as a rental property and tax shelter.
The owner who rents out the home "full time" is getting three benefits: First, the renters are helping to pay off the mortgage, if any. Second, you still can cash in on any appreciation that might result from increasing property values. And third, you can depreciate the building-not the property it stands on-which can provide substantial tax benefits.
Depreciating an asset means you are taking a deduction for the value lost as an asset ages. According to the accounting firm of Ernst & Young, the period of time over which you depreciate your property has long been the subject of controversy. Often, it depends upon when the property was put "in service.'' Depreciation is limited only to the percentage of time that a house is rented. If you rented for 90 days and use it yourself for 10, you can take only 90 percent of the total expenses and depreciation.
But another way to catch a few hours at the beach without eating into or exceeding the 14-day or 10 percent limit is to clean the house yourself between renters. Days spent maintaining the house do not count toward the personal-use limit. And you can deduct travel costs to get to the house and expenses such as paint and cleaning supplies.
However, if the Internal Revenue Service determines that you were at the house more to sit in the sun than to clean the bathrooms and paint the porch, those days may be added to your personal use and could jeopardize your tax savings.
If your intent is not to be in the full-time rental business, you still might like to keep an ear to the ground during the summer family reunion time. There are probably people you know that you certainly would allow to rent your place. Who knows? Their reunion dates just might fall on the time that you promised to visit the grandkids.
The bottom line is that there are very few ways to pocket tax-free cash. And, it doesn't cost anything to listen to a neighborly proposal.
Tom Kelly's novel "Cold Crossover" is available in print at bookstores everywhere and in both print and Ebook form from a variety of digital outlets. Follow real estate agent and former basketball coach Ernie Creekmore as investigates the disappearance of his star player on a late-night boat. Check out the national reviews and put "Cold Crossover" on your list.