So confused! We have a cabin (second home) that is a short-term rental. We use a property manager to handle bookings (using her own website and VRBO), pay sales tax, arrange for cleaning, etc. She gets a percentage of the net fees paid by guests. The average stay of guests is 3 days or less. However, we handle all major repairs, pay for maintenance and supplies and the like. We travel there about 12-15 times per year to make improvements and major repairs. For the life of me I can't tell if this is active or passive income.
The property manager sends us a 1099-Miscellaneous reflecting the net amount we're paid, but a tax guy told me a couple of years ago that we need to report the entire rate as Rent, then show the fees the manager keeps as a deduction (along with other expenses). Is this correct? It hasn't been a problem until this year when our losses are being disallowed because other income over the threshold.
