Know These Tax Rules If Your Average Rental Is Seven Days or Less

Do you rent it out for an “average” rental period of seven days or less?

If you do, be aware. You have now landed in the “vacation hotel” area of the tax code … which can make things tricky.

Of course, the job of the Tax Reduction Letter is to make things un-tricky which is exactly what we’ll do when you read my new article titled Tax Tips: Know These Tax Rules If Your Average Rental Is Seven Days or Less.

You’ll learn whether your seven-day-or-less rental property should be reported on Schedule C. The tax code states that providing services with short-term rentals creates a business that’s reportable on Schedule C and subject to self-employment taxes. We’ll cover the implications of net income, net losses, and rendered services when you read the full article.
We’ll explain the relevant passive loss rules. For the purpose of the passive loss rule, your property (with an average rental of seven days or less) is not considered a rental for passive loss purposes, even when it’s reported on Schedule E. All this and more will be explained when you read the full article.
We’ll tell you how “material participation” rules affect you. If your seven-days-or-less rental produces a tax loss, regardless of having reported the loss on Schedule C or E, you can deduct the loss in the current year but only if you materially participate in the seven days or less rental property. The IRS lists seven material participation tests. You’ll get all the details when you read the full article.