16 Replies Latest reply: Sep 18, 2019 6:38 PM by jl11 RSS

    VRBO as a house swap service

    keepsmilin New Member

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        • Re: VRBO as a house swap service
          bonesxxx Active Contributor

          Maybe 10 years ago.  Vrbo is Expedia now.

           

          All Expedia cares about is shareholder value created by squeezing owners and fleecing guests with exorbitant fees.

           

          It‘s a cool idea though. I’d trade a week at my cabin in fall for a week in the Caribbean in March

          • Re: VRBO as a house swap service
            green_mango Active Contributor

            VRBO does not care about generating additional return on our investment.  VRBO wants their service fee, and there isn't one when $ isn't exchanged (I certainly wouldn't pay VRBO a service fee on a trade).  A lot of owners like the trade idea, and there are FB groups that help facilitate trades.  Keep in mind that trades count towards 14 day per year IRS personal use limit and beyond that special accounting is needed and it's a big headache for me, so I just stay out of it.

            • Re: VRBO as a house swap service
              wildiris Active Contributor

              Have you researched the income tax ramifications of a house swap?  For me, doing a house swap is not something that I would be interested in doing for income tax reasons.

                • Re: VRBO as a house swap service
                  koko Active Contributor

                  Would you mind explaining what the issue is with it? I would appreciate it

                    • Re: VRBO as a house swap service
                      wildiris Active Contributor

                      I would have to check the IRS regs again, but as I recall, you would have to declare it as income even though you didn't receive money for the stay.  It's considered a barter and the tax treatment of barter transactions isn't very favorable.

                      • Re: VRBO as a house swap service
                        ambidextrous Active Contributor

                        koko wrote:

                         

                        Would you mind explaining what the issue is with it? I would appreciate it

                        Well, first, realize that I am not a tax expert and this is not tax advice.... In my situation, I can deduct all expenses of the home if I do not use the home for personal use for more than 14 days a year. Once I exceed that, then I have to pro-rate all the expenses and can only deduct parts of all those bills. (This is very very bad and should be avoided at all costs!)

                         

                        If I were to swap my home with someone else, the time the other person stays in my home is considered my personal time since it is being used for fun. Bad! Same goes for donating the home to a local charity auction. You give it away, and since you are not receiving any reportable income, it is personal use. This makes your gift to the charity very expensive. And, even if you give someone a great rate because they're friends, you had better be able to justify the discount. If the IRS determines that the 8 nights at half price was too good a deal, well that could be counted as four nights personal time. (Yeah, rare, but if you do this you'd better be prepared to explain why you gave your pal such a great deal...)

                         

                        The best way to swap homes with someone is to simply rent from each other, claim the income and move on...

                          • Re: VRBO as a house swap service
                            koko Active Contributor

                            Thank you for this.

                            I did think it had to do with write offs since it is somewhat like the in home office deduction scenario.

                            However, there are surely legal ways to  be charitable, as we years ago in the worst fires housed a family for months and could deduct all the expenses related to that and write them off against ordinary income.

                            Maybe not the same scenario exactly than trading spaces outright but a net 0 should be just that. HA gets no fee and neither get the home owners reimbursed for cleaning etc.

                            If no monies change hands and the house costs money sitting there empty - i.e mortgage, gas, electric, garbage etc - this could not be construed as private usage for fun times - not even the IRS is that twisted.

                            Or are they?

                              • Re: VRBO as a house swap service
                                ambidextrous Active Contributor

                                Koko, first, there are different scenarios for use and management of the home that make the IRS rulings less that linear. That's why I said "in my situation"... and my situation is that I am an active manager of the property and I do not use it more than 14 nights. Therefore, I can deduct all of the utilities, taxes, etc.

                                 

                                I never saw anything in IRS rules that allowed anyone to use the home without paying the going market rate and not have it count against your 14 days of personal use. So, If you give your home to the nice people who needed shelter after a disaster, if you exceeded the 14 nights, I do believe that you would then be in the other category of having to prorate all the costs of the home -- and your share is not deductible. (i.e. -- personal use 50 days, rented 200 days means you can deduct 80% of the expenses).

                                 

                                Maybe there is something elsewhere in tax code that would accommodate charitable acts during a declared disaster, but I do not know. I do know that if I donate my home to, say, my church or youth sports programs for them to raffle off, the nights occupied by the winners are counted as my personal time.

                                  • Re: VRBO as a house swap service
                                    auntytammy Contributor

                                    When I have donated a week here or there to a charity as a Silent Auction item, my CPA treats it as advertising--not a gift. Thus, it does NOT count against the 14-day rule cited. Further, time spent in the VR by Owners performing home improvement projects do not either. The IRS expects you to maintain your property and understands that this will result it being taken off the market accordingly. So, while "ambidextrous" interprets this IRS rule very strictly, there are exceptions. It goes to intent. And, let's face it, once you own a VR you never take a vacation again. I do NOT consider any of my time in my VR as "personal use." It's ALL business. Check with your own tax lawyer or CPA to see how you can make your donation work to your advantage.

                                      • Re: VRBO as a house swap service
                                        bonesxxx Active Contributor

                                        Time to start a tax question forum?

                                         

                                        Ive learned a fair bit from this convo but I'd never find it in a search... especially with an empty OP

                                        • Re: VRBO as a house swap service
                                          green_mango Active Contributor

                                          auntytammy I agree & disagree

                                           

                                          When I'm at my VR, I'm working on projects every day, so I rarely count those days towards my 14 allowed.  When I have family stay for free, I count those days in my 14 allowed. 

                                           

                                          As far as your CPA treating a donation like advertising, I'd not want to try to defend that in the case of an audit.  If you're not paying money out of pocket, there's no advertising cost to deduct.  If deducting the value of the stay as "advertising" then I'd be wary doing that - at the end of the day we can't take a tax deduction for donating time at aa VR - the IRS website literally has an example of how a VR owner can't deduct to a charity auction.  I've found the best solution is to donate cash to the charity and not time.  Naturally, all owners are welcome to donate time at their VRs for charity, it's just simply not a tax deduction no matter how you wrap it. 

                                           

                                          See Example 2, page 8 from the IRS site:

                                           

                                          Example 2. Mandy White owns a vacation home at the beach that she sometimes rents to others. For a fundraising auction at her church, she donated the right to use the vacation home for 1 week. At the auction, the church received and accepted a bid from Lauren Green equal to the fair rental value of the home for 1 week. Mandy can't claim a deduction because of the partial interest rule. Lauren can't claim a deduc- tion either, because she received a benefit equal to the amount of her payment.

                                          https://www.irs.gov/pub/irs-pdf/p526.pdf


                                           

                                          • Re: VRBO as a house swap service
                                            ambidextrous Active Contributor

                                            auntytammy wrote:

                                             

                                            When I have donated a week here or there to a charity as a Silent Auction item, my CPA treats it as advertising--not a gift. Thus, it does NOT count against the 14-day rule cited.

                                             

                                            Further, time spent in the VR by Owners performing home improvement projects do not either. The IRS expects you to maintain your property and understands that this will result it being taken off the market accordingly. So, while "ambidextrous" interprets this IRS rule very strictly, there are exceptions. It goes to intent. And, let's face it, once you own a VR you never take a vacation again. I do NOT consider any of my time in my VR as "personal use." It's ALL business. Check with your own tax lawyer or CPA to see how you can make your donation work to your advantage.

                                            Well, your CPA can call a gift of occupying your home advertising if she wants, but when the IRS audits you, you'd better be ready with the great results of your ad -- as in "I got three paying customers from that group in the charity auction". You might also want to be ready to show how your property was "advertised". Yes, you may get away with that interpretation, but I would advise anyone else to proceed with caution. I did interpret the IRS ruling "very strictly"... in my experience, that's sort of how the IRS interprets their rules too. Frankly, I find it a stretch to call giving away personal time at your rental something other than giving away time at your rental.

                                             

                                            And, yeah, I know, work trips are not counted as personal time. Geez.

                                • Re: VRBO as a house swap service
                                  koko Active Contributor

                                  Why is the original post missing?

                                  • Re: VRBO as a house swap service
                                    auntytammy Contributor

                                    While I cannot see the original post either, I will say that years ago I did consider joining a company/website that did just that: facilitated home swaps. However, ultimately the thing that really held me back had to do with the handling of fees such as Housekeeping Fees. As the property Owner, I would have been responsible for paying the Out Cleans for my fellow Owner/Guest stays. And, that was a deal-breaker as I was not about to come out-of-pocket on a trade.

                                     

                                    Today, there are several operators providing similar services. Although, most recently, I did have a property inquiry from a fellow HA/Vrbo Owner. And, that got me thinking that as Partners, Expedia should at least WAIVE the so-called Service Fee. After all, they should have no difficulty verifying our standing with Expedia, right?

                                    • Re: VRBO as a house swap service
                                      jl11 Senior Contributor

                                      Before the whole HA/VRBO system went into lockdown (i.e. no communication between owners and travelers pre-booking), I exchanged several weeks with other VRBO owners around the world. Our rates were pretty much the same so it was a fairly equitable swap.  We tended to do off-season, which was fine for all parties. We could see each others' reviews online and knew what we could expect and we could communicate directly. It worked out very nicely and I made a few new friends in the process. It's a pity that's not possible anymore.