Investors & landlords
No you can't claim sch C. Sch C is for a real business (not a hobby) with the required time investment. Rentals are sch E unless you offer substantial services. If you have the required time, then you are a professional and take all deductions on sch E. Having an LLC just means you filled out some paperwork. It doesn't prove to the IRS that you are putting in real time and effort. Active participation takes little time.
There is a big difference between active participation and running a business.
You may be able to deduct up to $25,000 of losses from a Schedule E if you Actively Participate in the rentals.
Active participation: You actively participated in a rental real estate activity if you (and your spouse) owned at least 10% of the rental property and you made management decisions or arranged for others to provide services (such as repairs) in a significant and bona fide sense. Management decisions that may count as active participation include approving new tenants, deciding on rental terms, approving expenditures, and other similar decisions.
For more information please see: IRS Publication 527
If you want a bigger deduction, more time involved running the business is required. To surpass the $25,000 passive limitation, you must meet the requirements of a professional with real estate. It does not mean you are a sales agent, it is asking about the time involved. If you are putting in the time, you can take additional losses. Otherwise, you max out at $25,000 for loss.
The IRS offers this comparison: Earning side income: Is it a hobby or a business?
