 So dividing expenses. If you use a dwelling unit for both rental and personal purposes, divide your expenses between the rental use and personal use based on the number of days used for each purpose. So when dividing your expenses, follow these rules. Here's where we get to the nitty and the gritty. So the nitty gritty here. So any day that the unit is rented at a fair rental price is a day of rental use, even if you used the unit for personal purposes that day. This rule doesn't apply when determining whether you use the unit as a home. So any day that the unit is available for rent but not actually rented isn't a day for rental use. So that's where it gets kind of messy because you're saying, because what we would like to be able to say generally from our perspective would be I want to have the ratio that's going towards the rental property as high as possible. So if it, if it wasn't being rented but was available to be rented, I would like to be able to count that as a day that is going towards rental use and the IRS could be more stringent than that from the IRS perspective. Obviously you would think they would want to lean towards the personal side of the use because that will limit the amount of expenses. So again, any day that the unit is available for rent but not actually rented isn't a day of rental use, fair rental price. A fair rental price for your property is generally the amount of rent that a person who isn't related to you would be willing to pay. Now this is another area that's a huge pitfall with rental properties that causes all kinds of confusions and whatnot, which is that if you're renting to someone that that is a relative or something like that, then you don't have a fair market transaction oftentimes and the prices get messed up. So, so then the, so then you have to be saying, well, I'm renting it at a fair rental price, whatever that is based on the market. So you would think that you can do some kind of appraisal according to the market to see what that is, which is difficult because each piece of real estate is unique. So you have that situation. So the rent you charge isn't a fair rental price if it is substantially less than the rents charged for other properties that are similar to your property in your area. So ask yourself the following questions when comparing another property with yours. Is it used for the same purpose? Is it approximately the same size? Is it in approximately the same condition? Does it have similar furnishings? Is it in a similar location? If any of the following answers are no, the properties probably aren't similar. Example, so your beach cottage, my good old beach cottage, I love that thing. Your beach cottage was available for rent from June 1st through August 31st on 92 days. Except for the first week in August, seven days when you were unable to find a renter, you rented the cottage at a fair rental price during that time. The person who rented the cottage for July allowed you to use it over the weekend two days without any reduction in or refund of rent. Your family also used the cottage during the last two weeks of May 14 days. The cottage wasn't used at all before May 17 or after August 31st. All right, so let's figure the part of the cottage expenses to treat as rental expenses. All right, so the cottage was used for rental a total of 85 days. So that's the 92 days that you had it for rent, but you couldn't get someone in it for the seven days. That's where we get to the 85 days. We on our end would like to use the 92 number, but no, they're saying the IRS says no 85. So the days it was available for rent, but not rented seven days aren't days of rental use. So we had to take those out bummer. So the July weekend two days you used it is rental use because you received a fair rental price. So you're going to say, well, what about those two days that I actually used it, but I still received the full rental price. So you would expect that that didn't didn't hamper the personal use and the rent in use. So we get those two days. So that's good. You used it rental because you received the fair price. So you use the cottage for personal purposes for 14 days. The last two weeks were two weeks of personal use. The total use of the cottage was 99 days 14 days personal use 85 days rental use. So your rental expense are 85 divided by 99 or 86%. Note that if you didn't have this guidance, you might make different kind of assumptions with regards to the percent allocation. And obviously on the taxpayer side of things, you would probably lean towards trying to maximize the percent that's for the rental side so that you can maximize your expenses. So just for comparison purposes, if you didn't have this guidance, you might assume something like this. You might say, hey, look, I had this, this cottage was out there for rent all a year. And then I only used it for 14 days. So let's say you might say something like, well, it was out there for 365 days minus the 14 days that I used it, it was available, you know, 351 days rental. So 351 divided by 365 is like 96% rental, right? You could you could imagine coming up coming up with that kind of calculation, comparing it to the total number of days. But notice it's the code the code is saying we want you to see the days that are in use. So you had it 85 days of rental. And then you used it for two weeks. So that's going to be the 14 days. So so notice when we when we do our ratios, your rental expenses are 85 days over the 99, the 99 being the 85 plus the 14, which is far less than the number of days in the year, which is 365. So again, you can kind of imagine if you made different assumptions like very different type of ratios here that would be favoring either the taxpayer or the IRS in different situations. So the tax code, of course, is trying to nail down what that ratio kind of assumption should be. All right, note when determining whether you use the cottage as a home the July weekend to two days you used it is considered personal use, even though you received a fair rental price for the weekend. So when determining whether you use the cottage as a home, which is, you know, a different that was a different thing that we had to determine whether it's going to be used as a home versus our calculation here, which is the figuring the part of the cottage expenses to treat as rental expenses. Okay, and then therefore you had 16 days of personal use and 83 days of rental use for this purpose, because you use the cottage for personal purposes more than 14 days and more than 10% of the days of rental use, eight days, you used it as a home. So if you have a net loss, you may not be able to deduct all of the rental expenses. So now we're running into that net loss type of situation, remembering that the IRS is going to be quite skeptical of the losses, they want a piece of your income and that they're going to be skeptical of the losses. So to see that we could see dwelling unit used as a home and we'll continue with that in a future presentation.