Personal use of rental property?

Question

I have a decent knowledge of tax issues but I am having trouble trying to figure one thing out. Someone wants to take a loss on a rental property that was also used for personal use. The property was used 20 days for personal and 150 days as rental. Normally this would mean that he is not allowed to take the loss since his personal use is above the threshold.

The only issue I have is that the property was not rented out by the taxpayer, but a property management company. The company only allows 25 days of personal use per year and is in control of the property the rest of the year. Since the tax payer cannot control the number of rental days, some could argue that he has really rented it to the company for the entire year less the 20 days. This would qualify him for the rental loss since he is below the 10% threshold.

Anyone know any authority for this? Tax court cases would be great.

I forgot to mention that the management company gives him a flat annual payment regardless of whether or not it can rent the property. The Taxpayer receives no other rental income after that.

Answer 1

Sorry, but the taxpayer controls his own property. He's under no obligation to use a specific property manager or any property manager at all for that matter. The taxpayer is the landlord as far as the IRS is concerned and the number of days that he received rent (or was due rent that went unpaid) for the property is the number of days that it was rented.