Private lodging hired by visitors for a brief stay is referred to as a vacation rental. It often comprises a furnished apartment, house, cottage, cabin, or lodge and is frequently chosen by many travelers as an alternative to a hotel or hostel.
The demand for regional experiences is the cause of its rising popularity. Travelers can immerse themselves in the local culture and feel simultaneously “at home” and authentic because vacation homes frequently have a more distinctive and intimate atmosphere. While vacation rentals are available in most nations, the phrase is most frequently used in the United States.
What Qualifies as a Vacation Rental Property’s “Personal Use”?
If you own a vacation rental home and occasionally use it, you should be aware that the IRS will consider your taxes differently depending on how many days you spend there.
You are regarded as a landlord if you rent out your house for more than 14 days in a given year and you are required to record your rental revenue. Your rental home will be regarded as your residence if you utilize it for personal purposes more than 10% of the days it is rented out. As a result, you will no longer be able to deduct expenses because it will no longer be regarded as a business.
Even if they are paying rent, it counts as personal usage whenever you or a family member stays there. Days that you provide the home as shelter or rent it out below market rate are also included. The personal use limit does not apply to maintenance or repair days, though.
Hotels vs. vacation homes
Compared to traditional hotels, vacation rentals offer guests more privacy and space. Guests frequently get exclusive use of a kitchen, pool, and outside the area because they are frequently the only people staying at the resort.
According to AirDNA, worldwide hotel occupancy in 2020 was 17.5%, compared to 36.4% for vacation rentals. Due to the epidemic, visitors are choosing vacation homes outside of cities because they offer more opportunities for social isolation and contactless check-ins. Vacation rentals have replaced hotels as a more pleasant option because hotels are frequently more congested and situated in tourist regions.
Size of the global vacation rental market
The market for vacation rentals was estimated to be worth $87.09 billion globally in 2019 and was projected to grow to $87.61 billion by 2020. The global market size is anticipated to develop at a compound yearly growth rate of 3.4% from 2020 to 2027.
Despite limitations and changes in travel, the percentage of users worldwide will reach about 11.1% in 2025.
Size of the US Vacation Rental Market
Twenty percent of all vacation rental businesses are located in the US. In the United States, there are currently approximately 23,000 vacation rental businesses. In 2021, the vacation rental business is expected to generate a total of around $66,901 million in income, but the US alone is expected to generate $13,324 million.