Short term rental as a business

Forum|Forum|4 years ago
April 18, 2022
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We have purchased a home we are using as business for Short Term Rental. We are actively managing and providing the services ourselves so are using Schedule C. We have another home we have been using as a STR for years but have a property manager. We have always reported it on Schedule E. Could we be reporting it as a business on Schedule C as well?

PattiF

It depends on how active you are in the day-to-day activities of the other rental.

Generally, landlords filing 1040 or 1040-SR returns will report their rental income and expenses on IRS Schedule E: Supplemental Income and Loss.

However, if you provide "substantial services" to your tenants or your real estate business generates rental income, use Schedule C: Profit or Loss from Business.

Properties rented through a corporation or partnership (including LLCs taxed as such) report rent-related income and expenses on the business's return.

How can I tell if I'm providing "substantial services" to my renters?

Substantial services go above and beyond the basic services typically provided to renters (utilities, maintenance, landscaping, trash collection, etc.). If you’re providing hotel-like perks such as regular cleaning or maid service (in excess of 10% of the rental cost), fresh linens or towels, in-room coffee, transportation, or sight-seeing, you’re providing substantial services, and that means you'd file Schedule C.

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