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Level 3

Schedule E ownership question

I Airbnb homes that I lease from other people, I am not the property owner. In filling out the schedule E, I find it very confusing. My choices are below, please let me know if i'm doing it right.

1. At the bottom of "It this a rental property or royalty", it asks "this property is owned by" and displays my name, my wife's name, and "both of us". Just to move on, I chose my own name just to move on.

2. "what type of rental is this" I chose Vacation rental (i rented out the house 249 out of 365 days in 2017)

3. skipping to the next important part, under "property ownership", I chose, "No, I owned less than 100% of xxx house" 

4. "we can automatically divid your income and expenses for you", I chose "yes" and put 0% for ownership percentage.

5. "do you materially participate in this rental property", I chose yes

6. "rents from a trade or business" I chose yes since i run 4 rentals and it is my full time job.

7. "lets find out if you're an active participant in this property" I chose "no"

Did I do this right?

1 Reply
New Member

Schedule E ownership question

You are correct that airbnb rentals can be put it on schedule E, but since you are working to rent the units full time, I would actually recommend putting it on schedule C as a self-employed business.  You'll find the questions more applicable. Enter all property rents , under rent for business expenses. Report all earnings as business income. 

If you prefer to use schedule E (passive rental), then you almost have all of the questions correct. You won't add the property as an asset for depreciation under the rental expenses section, which is the primary difference between how it would be entered if you own the home/apartment. 

  • For #2, because you primarily rented these home, you should not use vacation home. Instead I would recommend using the first option, single family home for all units, as long as they are individual units. You'll still be able to enter any personal days that you used the property, but you should enter all days available for rent, as a rental unit. For example, if the rentals were available for 365 days and only rented for 249, then you should report the rental was for 365 days.  This allocation is only for days in which you were personally using the property. All of your expenses are deductible if you weren't using the rental, personally. 
  • For #4, this is referring to allocating expenses, which may not apply to you. If you've tracked all of the expenses for the rentals during the time you rented it (which I presume so since you entered 0%), select to enter your expenses yourself. 
  • For #7, it definitely  sounds like you are an active participant in renting the property, so you can answer yes. Click the links on that screen for more info, to read more. 
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