Short-term rentalsShort-term rentals are another option. If you do it for 14 days or less, there are no tax deductions, but you also don't have to report the income, Ochsenschlager says. That's known as the "Master's Provision," he says, because that tax break allegedly originated with people who lived on the golf course in Augusta, Ga., and rented their homes during the Master's Tournament.
During Barack Obama’s inauguration, hotel rooms in Washington, D.C., went for hundreds of dollars a night -- an ideal situation for anyone looking to rent out a house, says Christine Hrib Karpinksi, author of "How to Rent Vacation Properties by Owner." She is also director of the owner community on Homeaway.com, which has many articles and tips on how to rent a home short-term.
Other such opportunities include the Super Bowl, Kentucky Derby, World Series, college bowl games, the South by Southwest music festival, Mardi Gras and the Jazz and Heritage Festival in New Orleans. You don't even need to live in a city with a huge event, Karpinski says. Do you have a university nearby? Think of homecoming, parents' weekend, alumni gatherings or big athletic events. What conventions are coming through your town?
Karpinski interviewed several brothers from rural Illinois who built a cabin on their parents' land to have a place to stay on family visits. On a whim, they decided to see if they could rent it out when they weren't there. "What they found out was they had to start scheduling their own time because they were getting booked," she says.
Short-term rentals should be furnished, right down to linens and dishes. You also need to be comfortable with people in your home. "If you get offended if your mother-in-law comes over and opens cupboards, it's not the right thing for you," Karpinksi says.
Dana Waldon has rented her second home in Albuquerque, N.M., to members of film crews. New Mexico's film tax incentives draw numerous productions to the state. Many other states, including Louisiana and Michigan, see a good deal of film activity because of their tax incentives.
Waldon says it might be better to rent the house consistently for $1,500 a month, but her last short-term rental, to a costume designer, went for $2,200 a month, so it can be lucrative. Having your house used for an actual film shoot can be even more lucrative, ranging anywhere from $1,000 to $5,000 per day. Sometimes you can list your property with film departments in local and state governments.