@siddjain1 wrote:
.....I understand that putting yourself in the active income category is good when you are operating at a loss whereas passive income is desirable when you are operating at a profit so you don't have to pay self-employment tax. correct?
There are different types of income and it would be well not to conflate them.
You are basically correct but, technically, the difference in terms of self-employment tax is earned versus unearned income (and you pay self-employment tax on the former).
@siddjain1 wrote:
....Would this be reported on Schedule E or Schedule C? my guess is Schedule E
You would report the income on Schedule C only if you provide significant services to your renters. Otherwise, you report on Schedule E.
@siddjain1 wrote:
.....Would this be considered as passive income or active income? my guess is passsive
Yes, if you are using a management company, it's almost a certainty that your rental income would be considered to be passive (i.e., you do not materially participate).
