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. Residential Rental Property

    A type of property that derives more than 80% of its revenue ...
  2. Rental Real Estate Loss Allowance

    A federal tax deduction of up to $25,000 that is available to ...
  3. Income Property Mortgage

    A loan given to an investor to purchase a residential or commercial ...
  4. Form 4797

    A tax form distributed by the Internal Revenue Service (IRS) ...
  5. Turnkey Property

    A fully renovated home or apartment building that an investor ...
  6. Alligator Property

    In real estate, when the cost of mortgage payments, property ...
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. 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.
  4. Taxes

    Getting U.S. Tax Deductions On Foreign Real Estate

    If your home or second home is not in the United States, you can still get U.S. tax deductions. How many and what kind depends on whether you also rent it.
  5. 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.
  6. 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.
  7. 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.
  8. 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.
  9. Investing

    5 Ways Rental Properties Jumpstart Your Finances

    Rental properties can help pay your mortgage, provide tax benefits and create retirement income.
  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. Operating Ratio

    A ratio that shows the efficiency of a company's management by comparing operating expense to net sales. Calculated as:
  2. Expense Ratio

    A measure of what it costs an investment company to operate a mutual fund. An expense ratio is determined through an annual ...
  3. Pro Forma

    A Latin term meaning "for the sake of form". In the investing world, it describes a method of calculating financial results ...
  4. Trumpcare

    The American Health Care Act, also known as Trumpcare and Ryancare, is the Republican proposal to replace Obamacare.
  5. Free Carrier - FCA

    A trade term requiring the seller to deliver goods to a named airport, terminal, or other place where the carrier operates. ...
  6. Portable Alpha

    A strategy in which portfolio managers separate alpha from beta by investing in securities that differ from the market index ...
Trading Center