While the IRS considers rent paid to you as income, there is one way to make some extra cash and keep it all.
No, unfortunately you can’t just rent out your properties tax-free indefinitely, but you can for up to fourteen days. This is an exemption called the “Masters Exemption.” Under the Masters Exemption, you are allowed to rent out your property for up to 14 days and not have to pay taxes on the income.
This could be a huge deal if people are willing to pay large sums because you live somewhere exotic or perhaps close to where a big conference or annual event takes place. In fact, that’s how the exemption got its name—homeowners near the Masters tournament in Georgia rent out their houses during the tournament. It’s been reported that some have received up to twenty thousand dollars—all tax-free.
The tax-free duration can only be 14 days total in a tax year. And it can be used for more than one property per filing. So someone with 3 houses could collect tax-free rent for up to 42 days provided that not one property exceeded the the rental by 14 days.