DEFINITION of 'Rental Pool'

A type of contract-law sharing arrangement. Rental-pool arrangements resemble time-shares in the sense that in both cases, different parties divide the use and expenses of property. Rental pools seek to increase the number of days the home is occupied for a fair rental value and, by doing to, avoid the loss restriction imposed by the IRS.

However, the arrangements have not held water with the tax courts, which have ruled that only the days that a home is actually rented out can be considered fair rental days, not the number of days that the home is available for rent through the rental-pool arrangement.

BREAKING DOWN 'Rental Pool'

Rental pools can also be used for personal property, such as computers. They are also applicable for installment purchase agreements, where rental revenue from the property is counted toward the purchase price. They can even be used by such entities as water districts, in the form of water rental pools.

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