A dwelling unit for these purposes can include a vacation home. The importance of defining personal use of a dwelling unit is that it will determine how much of your rental expenses you can deduct:
If you used a dwelling unit for personal purposes as well as rental purposes, and the dwelling unit is considered to be a “dwelling unit used as a home” (defined below) you cannot deduct rental expenses that are more than your rental income.
If the dwelling unit is not considered your home, you can deduct rental expenses that are more than your rental income, subject to certain limits. These are the “Passive Activity Limits” and are described below.
Dwelling units include houses, apartments, condominiums, mobile homes, vacation homes, boats, and similar property, provided they have basic living accommodations.
Dwelling units do not include property used solely as a hotel, motel, inn, or similar establishment. A space, such as a room in your home, that is regularly available for occupancy by paying customers or tenants, would not be considered a dwelling unit.
Dwelling Unit Used as a Home
Once you determine that a property is a dwelling unit, you must then determine if it was used as your home. It is considered a home during the tax year if you use it for personal purposes for the greater of 14 days, or 10% of the number of days it was rented out at a fair rental price.
You may not have to include as personal use the days before and after you rented the property or offered it for rent, if:
You rented or tried to rent the property for 12 or more consecutive months, or
The period you rented or tried to rent the property was less than 12 consecutive months because you sold or exchanged the property.
A day of personal use is any day, or part of a day, that the unit was used by:
You, for personal purposes;
Any other person for personal purposes, if that person owns part of the unit (unless rented to that person under a "shared equity" financing agreement);
Anyone in your family (or in the family of someone else who owns part of the unit), unless the unit is rented at a fair rental price to that person as his or her main home;
Anyone who pays less than a fair rental price for the unit; or
Anyone under an agreement that lets you use some other unit.
Days that you spend working substantially full-time in repairing or maintaining the property do not count as personal use days, even if other family members are using the property for recreational purposes (for example, days you spend working on your vacation home).