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We are considering going the house swapping route for our future travels, via a website similar to this one: https://www.homeexchange.com/ This would be instead of listing on a site like AirBnB, where we are paid for our home and would then pay for someone else's home, instead we would earn points by letting people stay in our house and redeem points when we stay in other's houses. There is no exchange of money with home exchanges, but does that necessarily mean not taxable?

TIA,

IP
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There is no exchange of money with home exchanges, but does that necessarily mean not taxable?

From the IRS Pub 525 https://www.irs.gov/pub/irs-pdf/p525.pdf

Bartering is an exchange of property or services. You must include in your income, at the time received, the FMV of property or services you receive in bartering. If you exchange services with another person and you both have agreed ahead of time on the value of the services, that value will be accepted as FMV unless the value can be shown to be otherwise. Generally, you report this income on Schedule C (Form 1040) or Schedule C-EZ (Form 1040). However, if the barter involves an exchange of something other than services, such as in Example 23, later, you may have to use another form or schedule instead.

Since rental of a home would be usually be reported on Schedule E, that would probably be the appropriate schedule.

AJ
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From the IRS Pub 525 https://www.irs.gov/pub/irs-pdf/p525.pdf...

Sounds easier just to rent them out.

IP
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aj is, as usual, right. But she missed another bit of tax law. If you rent out your primary residence for less than 15 days, the income is not taxable and is not required to be reported. So as long as your house swap is 2 weeks or less during a year, you have no problems.

https://www.irs.gov/publications/p527#en_US_2018_publink1000...

Used as a home but rented less than 15 days.
If you use a dwelling unit as a home and you rent it less than 15 days during the year, its primary function is not considered to be rental and it should not be reported on Schedule E (Form 1040). You are not required to report the rental income and rental expenses from this activity. The expenses, including qualified mortgage interest, property taxes, and any qualified casualty loss will be reported as normally allowed on Schedule A (Form 1040). See the Instructions for Schedule A (Form 1040) for more information on deducting these expenses.


--Peter
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So as long as your house swap is 2 weeks or less during a year, you have no problems.

Thanks Peter. We are looking at doing this for months at a time. Never been the If It's Tuesday it Must Be Belgium type, and retirement gives us this luxury of deciding where we want to be when we want to be there.

IP,
part gypsy
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Is Bartering Taxable?
It sure is. According to Scott Estill, a former senior IRS trial attorney and the author of "Tax This! An Insider's Guide To Standing Up To The IRS," casual exchanges between non-commercial parties for similar services is usually not taxable. Offering to cut a neighbor's grass while they are on vacation in exchange for the same, for example, won't trigger a tax consequence (the key to this that you are both non-business parties, and the value is nearly identical.). When businesses venture into the same waters, especially with products and services that they would normally profit from, the obligation to cut the IRS into the action can occur.
...
When goods, in particular, are exchanged, it may not be considered bartering at all. If two parties trade computers of equal value, for example, this may not be taxable – especially if neither party is in the business of selling computers.



https://www.investopedia.com/financial-edge/0312/the-tax-imp...

So since we don't rent our properties, this would imply that house swaps may not be a taxable event. That would change if we rented them out.

Comments?
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So since we don't rent our properties, this would imply that house swaps may not be a taxable event. That would change if we rented them out.

The issue that I see with this is that there is already an exception built into the tax code for renting out your personal residence, which is the 14 day or less exemption that Peter mentioned. There could be an argument that allowing someone else to use your house for more than 14 days is a rental that needs to be reported, since you are receiving something of value for that use.

I would also suggest that you pay close attention to a part of the article that you quoted: If two parties trade computers of equal value, for example, this may not be taxable – especially if neither party is in the business of selling computers.

If your house would rent long-term for, say, $2000 a month, and the house that you are staying in would rent long term for something other than $2000 (be it more or less), then it's not really trading something of equal value, so it's not a true barter.

AJ
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I would also suggest that you pay close attention to a part of the article that you quoted: If two parties trade computers of equal value, for example, this may not be taxable – especially if neither party is in the business of selling computers.

If your house would rent long-term for, say, $2000 a month, and the house that you are staying in would rent long term for something other than $2000 (be it more or less), then it's not really trading something of equal value, so it's not a true barter.


The format I am interested in involves being awarded points for letting people use your house, and redeeming them when you use someone else's house. So by redeeming the points you earn, it's an even trade, though you may not wind up redeeming them on the same people who used your place.

This is a system that has been in use for a good number of years. If it were a taxable event, wouldn't there be more in the articles about that? There is nothing either way in any of the articles I've read.

Appreciate your input.

IP
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