Having a career as a travel nurse can open you up to a world of new opportunities and experiences. Not only will you be able to explore new locations and their attractions, but you will also gain useful skills to take with you everywhere you go. It is never too late to start your travel nursing career. If you are thinking about doing so, but are worried about how to manage your home while you are on assignment, look no further. Below, we will go over strategies for renting out your permanent residence while being away for travel assignments.
Keeping Your “Tax Home”
One of the main concerns that homeowners have when figuring out how to manage their home while away on assignment is how to rent it out while retaining it as a permanent residence. Your permanent residence—the home you own/rent and live in—is also quite often your “tax home”—the location the IRS has listed as your residence for tax deduction purposes. A tax home is a general location in which you make a taxable income. For most, this is the town they live in and may include the neighboring areas. But if you are a travel nurse, your taxable income isn’t necessarily made in the same city or even the same state as your permanent residence—so the tax home rules are a bit trickier.
If you are on assignment for more than a year and renting your home to tenants, there is a risk of losing your “tax home” status, and therefore, your tax deductions associated with traveling for business. Once you have rented out your house, it can become the renters’ tax home, and be reclassified as your business property. Fortunately, there are a couple of ways to rent your property and maintain a tax home status at the same time.
A partial rental allows you to rent out your home while retaining a portion of it for yourself (your portion has to be for personal use and not just storage). Because you will still have a claim to a piece of the property, you will be able to keep your tax home even while being away on assignments. A partial rental can take different forms like renting out one or two rooms or different floors if that is an option for you.
You can also look into renting to family members or friends who you know well enough to stay at your property in between assignments.
Renting your property as a vacation rental (like an Airbnb) is perfect if you live in tourist hot spots. While the average travel assignment does not last more than a year, the vacation lease should not either. If you are occupying the residence right after the rental lease is up or for ten percent of the total days you rented it to vacationers, it will qualify, and you can still keep any travel reimbursements you receive tax-free.
While you are allowed to rent your home out completely for part of the year while you are away on an assignment, keep in mind that you cannot rent your property for vacation purposes for 12 consecutive months. Additionally, you will have to show proof that you stay there intermittently between assignments. Also, renting it this way too frequently could draw the attention of the IRS and require you to forfeit the property as your tax home for abandonment.
For regular travelers, there are three key criteria to keep in mind. As long as you can fulfill two out of three, you can keep your residence as your tax home, even if you are making your taxable income in a variety of locations away from your home.
- Does the individual have significant income at home? This means: Do you make money in the area that your home is located? If you are a travel nurse that still regularly works at a medical facility in your hometown, you can check the box on this criterion.
- Does the individual have substantial expenses maintaining their primary residence that are duplicated when on assignment? In essence, this criterion is asking: When you are working away from home, do you duplicate your costs by paying for lodging, food, and other necessities that you would already have were you at home? In most cases, the answer for travel nurses is yes.
- Has the individual abandoned their historical place of lodging and work? The question being asked here is whether you have “abandoned” your home, which is to say: Do you return to your home regularly and between assignments?
As long as you can fulfill two out of three of these criteria, you can still claim your permanent residence as your tax home, regardless of where you make your money. Make sure to read up on the stipulations to the rules, and consider how they will play into your rental plans and next assignment. Do not let anything prevent you from pursuing a fulfilling career in travel nursing. If you want to know more about how to become a travel nurse, here are seven simple steps to get you started.
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