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About Bailey Andersen

Bailey Andersen is a Staff Accountant in our Novato office.

IRS Clarifies Rules Regarding When Rental Property Activity Should be Reported as a Schedule Business

According to the IRS, not all rental property activity should be reported on Schedule E.   If the property owner provides “substantial services” to short-term renters, the IRS says that the rental activity should be reported on Schedule C, and that the property owner must pay self-employment taxes on the income.   If there is a loss, it can be fully deducted without regard for the passive loss limitation rules.   Substantial services are defined by the IRS as:   regular cleaning, changing linens, or maid services…furnishing of utilities or cleaning of public areas do not count as substantial services.  For example, if you rent out a room in your house on Airbnb to short-term renters, the “substantial service” requirement can be satisfied if you are cleaning and changing linens after each short-term […]

By |September 15th, 2018|Categories: Business Tax, Individual Tax, IRS, Real Estate|Comments Off on IRS Clarifies Rules Regarding When Rental Property Activity Should be Reported as a Schedule Business