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.

RELATED TERMS
  1. IRS Publication 527 - Residential ...

    A document published by the Internal Revenue Service (IRS) that ...
  2. Residential Rental Property

    A type of property that derives more than 80% of its revenue ...
  3. Income Property Mortgage

    A loan given to an investor to purchase a residential or commercial ...
  4. Earning Assets

    An income-producing investment that is owned by a business, institution ...
  5. Rent Expense

    The cost incurred by a business to utilize property. Business ...
  6. Form 4797

    A tax form distributed by the Internal Revenue Service (IRS) ...
Related Articles
  1. Taxes

    Tax Rules For Renting Out Your Vacation Home

    Here's a rundown of the specific tax rules that apply to homeowners renting out a vacation property.
  2. Investing

    Tax Breaks For Second-Home Owners

    The tax rules on a second home vary, depending on how the property is used.
  3. Investing

    Is 2017 the Year to Invest in a Rental Property?

    The rental housing forecast looks positive for 2017, and for some would-be real estate investors it may be the right time to acquire a rental property.
  4. Managing Wealth

    The Pros And Cons Of Owning Rental Property

    Owning rental property can be a rewarding and profitable experience, but it comes with some real risks.
  5. Investing

    4 Ways To Value A Real Estate Rental Property

    Real estate rentals can be a profitable alternative to the buy-and-sell approach if investors know how to make accurate valuations.
  6. Financial Advisor

    How to Reduce Real Estate Investment Taxes

    Real estate tax law is not the same for rental properties as it is for residences. These tips can help you pay less in taxes.
  7. Managing Wealth

    Where Landlords Can Get Over 20% Returns

    Despite rising home prices, some markets still offer solid investment returns for residential landlords, if you know what to look for.
  8. Investing

    Is It Worth Buying a Second Home to Rent?

    Mortgage interest rates are low, but consider these dos and don'ts before making the leap into rental property ownership.
  9. Retirement

    Generate Income For Retirement with Real Estate

    Learn whether rental income is compatible with your lifestyle, how to identify suitable properties, common pitfalls to avoid and how to secure financing.
  10. Investing

    4 Ways to Value a Real Estate Rental Property

    Learn to evaluate real estate and get into the investment game.
Hot Definitions
  1. Price Elasticity Of Demand

    A measure of the relationship between a change in the quantity demanded of a particular good and a change in its price. Price ...
  2. Market Capitalization

    The total dollar market value of all of a company's outstanding shares. Market capitalization is calculated by multiplying ...
  3. Frexit

    Frexit – short for "French exit" – is a French spinoff of the term Brexit, which emerged when the United Kingdom voted to ...
  4. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  5. Down Round

    A round of financing where investors purchase stock from a company at a lower valuation than the valuation placed upon the ...
  6. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
Trading Center