• Renting out your vacation home less than 15 days a year
• Renting out your vacation home as much as possible while never using your vacation rental for personal use.
• Renting the home more than 15 days a year and staying in it less than 15 days a year
• Renting the vacation home more than 15 days a year but also staying in the unit more than 15 days a year.

Keep in mind, the days you are staying at your home but doing some material work (like repainting, restocking, cleaning, etc) are not considered personal leisure days.

One premise in the article that I do not agree with is that you certainly can expect to make money on your vacation rental.  Let me clarify: I agree that not every rental makes money, but with some shrewd decisions on marketing and managing (such as advertising your vacation rental by owner rather than through a property management company), you can certainly turn a profit.

Of course, talk to your accountant about this stuff – don’t get your tax advice from a blog on the Internet!

Read the full article here.

Why does this Nigerian have a loaf of bread on his head? Click the image for entertaining stories.

If you’ve been around the internet for any period of time, you’re well aware of the scams arriving by email informing you of the vast sums of money you have won.  Or, if you help the Nigerian Princess move money out of her country, you can have a cut of it.

These scams have permeated the web so much that they have a name: 419 scams.  419 is the Nigerian Criminal Code that deals with fraud.  Most (but not all) of these scams originate from Nigeria.

If you read the Wikipedia entry linked earlier, you should take away two points:

1. These scams have been around a long time.  The originated in the early 80′s and were run via letters, faxes, telex.
2. These scams come in ALL shapes and sizes.  If a scammer can come up with a way to scam someone, they will try it over the Internet.

While there are countless variations of the 419 scam, I want to explain the version I’ve seen that targets vacation rental owners.  Read on to make sure you don’t fall victim to a scam.

Nigerian scams are as old as this Telex machine from the early 80s

Imagine you make a booking for someone who pays you via a cashiers check.  They accidentally overpay and when they find out, they ask you to send a refund via Western Union.  Guess what?  You’ve just been scammed!

As it turns out, the cashiers check is fake and it often takes your bank weeks to determine that it is fake.  By then, the scammer has their money via Western Union, and you are left with nothing from the cashier’s check except possibly a fee from your bank and a lesson learned.  Good times.

Don’t worry – it’s pretty easy to protect yourself.  You just need to know how these scams work so you know what to look out for.

These scams work like this:

1. The “renter” pays you money (rent)
2. The “renter” ask for some amount of money back.  The reasons are endless: Accidental overpayment, medical emergency, they want to cancel the booking.

If they’ve paid by check, money order, or cashiers check, you simply need to ask your bank to make sure it’s cleared and is not a fake before you issue the refund.  If the “renter” asks for a refund via Western Union or other wire service, it’s a scam.

If you end up in this position, do not refund any money until the bank confirms the check isn’t fake.  The renter will play on your emotions, telling you they need the money for medical bills or something horrible.  Unfortunately, you cannot trust them.

These scams are so common now and so hard to prosecute, that the scammer will likely never be arrested for what they have done.  However, if you find a scammer trying to scam you by booking your vacation home, please do the following:

• Cease communications with the scammer
• Notify the FBI here
• Notify the vacation rental listing website they used to contact you.  That will allow the website to conact other owners that also were contacted by the same individual.
• Notify the scammers email provider.  This can usually be done by sending an email to “abuse@” and then putting the domain name for the email provider.  For example, abuse@gmail.com or abuse@yahoo.com.  The provider will usually shut down that email address which may help other owners.

If you’ve been contacted by a scammer and can add anything from your experience, please comment below.

Submitted by Jon M., FindVacationRentals.com

• You have rental expenses on your tax return.
• You have large amounts of itemized deductions on your tax return.
• You claim tax shelter investment losses on your tax return.
• Your business expenses are large in relation to your income on your tax return.

Yikes!  That’s me!  To be fair, the odds of an IRS audit are low (like less than 1 out of 100 people low).  There just aren’t that many agents to read through everybody’s return.

However, as a vacation rental owner, you have immediately put yourself into a category of filer that will trigger an audit more often than the average American (we’re still only talking 1 or 2 out of every 100 people).  Don’t panic – I’m here to help!

Being a vacation rental owner offers you many tax breaks unavailable to most folks.  Heck, that’s part of the lure and financial perks you are entitled to!  So don’t worry, you just need to keep records of your expenses so you can take your legitimate write-offs and, if the tax man ever comes knocking, you can sit back and relax.

I’ll cover more of the financial setup of a vacation home owner in other blog post (keeping separate checking accounts, using software such as Quickbooks), however this post is about keeping proof of those expenses.  If you are audited, you will need receipts of your expenses.

You can hand the auditor over a box full of receipts for him to pour through, but unless you have a smile like Maggie Gyllenhaal that can persuade Will Ferrell to just ignore this audit, you’ll want to organize and save those receipts.

Here are solutions I’ve tried:

1. The Envelope Method

Keep receipts in a big envelope/box labeled “Condo Receipts 2008″ and put your receipt in there every chance you get.  This is fine, but suffers from a few issues.If you need to go back a month or so later to review a receipt, it’s a little cumbersome.  Another issue is lack of backups.You might as well label the box “Receipts 1982″ because this method is so 1980′s.

2. NeatReceipts

Scan your receipts and store them on your computer.  About 3 years ago I tried NeatReceipts for about a year.  While it is great in theory, I found the software pretty slow and bloated.  Way too many features for my needs and I felt it actually kept me from scanning my receipts too often.

Waiting for the software to load just to scan a single receipt was excruciatingly slow.  Slow like waiting on a contractor to finish that bathroom remodel he said would only take 2 weeks.  Riiighht.

Backup the NeatReceipts database on your computer with backup software such as Mozy for when (not if) your computer crashes!

3. PaperValet

I found this nice little tool after getting frustrated with NeatReceipts.  PaperValet is a very basic piece of software for about $25 – it scans a page and puts it on your computer as a PDF organized by category and date.  Perfect!

I actually used the scanner that came with NeatReceipts since it’s perfect scanning receipts.  I then created folder called “Condo Receipts” on my computer with categories and PDF files in those folders.

Backup that folder with backup software such as Mozy.  Unfortunately, this solution suffered from the same issues I had with NeatReceipts: I am lazy and wouldn’t scan the receipts.

4. ShoeBoxed

Hallelujah!  My current and favorite solution is Shoeboxed.  This is a receipt scanning solution sent from heaven!  You simply pay a flat annual fee and mail your receipts to them.  They scan them and put them online.  Wow!  This is the part of Web 2.0 that makes my life easier.

I’ve used this for a few months and I am already sold on this service.  The OCR is amazing – all of my receipts have been perfectly organized and tallied (I’m not sure if they have humans double-check each scan or if their OCR is that good).

Shoeboxed is making backups of your receipts, so you don’t need to worry about that.  However, you can always download a PDF or spreadsheet of all your receipts at any time.  Once a month I download all my receipts as a PDF just for piece of mind.  Oh, they’ll also send you a CD/DVD of all your receipts as well.

One other cool feature I like about Shoeboxed: If you use a single credit card for all your rental expenses (which you should), then Shoeboxed can immediately show you all your receipts from that single credit card.  Pretty spiffy!

What other methods have I missed?  Leave your comments below.