I need a place to enter the avg rental period of my rental property. If <7 days, it gets reported as a business instead of rental, which means it's not passive income.

[ericjford]

I don't see a place in TurboTax online to enter the average rental period, so it's not allowing me to offset other income with my rental loss.

[tagteam · Accepted solution]

There is no such place to enter the average period of rental.

If you provide substantial services that are primarily for your tenant's convenience, then you would report your income and expenses on Schedule C rather than Schedule E.

See https://www.irs.gov/taxtopics/tc414

[ericjford]

What if you don't provide substantial services?

[tagteam]

Report on Schedule E.

[AmeliesUncle]

When going through the introductory part of the rental section, it should ask you a question about what type of rental it is (Single Family, Multi Family, Vacation/Short-Term Term, etc.).  I suspect that if you check the Vacation/Short-Term, it will handle things properly.

[Critter-3]

Only check vacation/short term if you or your family use the property during the year when it is not otherwise rented.  

[AmeliesUncle]

Are you sure?  I don't think that is right.  The "short term" rental should adjust the passive rules, regardless if it is used for personal use or not.

[tagteam]

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@AmeliesUncle wrote:

Are you sure?  I don't think that is right.  The "short term" rental should adjust the passive rules, regardless if it is used for personal use or not.

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I believe the Vacation/Short-term selection merely changes the property type on Schedule E in the program. 

The fair rental value days and personal days control the passive exception.

[AmeliesUncle]

It SHOULD change the passive rules.  For example, one of the other choices is Self-Rental, and selecting that DOES affect how the program treats the passive rules.  I would THINK that short-term would do the same thing (but I have not tested it).

[tagteam]

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@AmeliesUncle wrote:

It SHOULD change the passive rules.  For example, one of the other choices is Self-Rental, and selecting that DOES affect how the program treats the passive rules. 

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Why? Should the rules be changed automatically merely because of the selection as a vacation rental? What if there are zero personal use days for any one year of ownership or for every year of ownership thus far?

The self-rental selection is somewhat different than the vacation property type as the income is always going to be nonpassive for the former as long as the property is a "self-rental". 

[AmeliesUncle]

Short-term rentals are non-passive, right?

So if selecting that does not change the passive rules, how do you tell TurboTax it should be non-passive (besides going into Forms Mode and checking the non-passive box)?  Is there a question about it in the interview?  That is what the OP is asking about.

[AmeliesUncle]

I did just test it out and you are right, changing that to short-term does not change the passive rules.

But that still leaves the OP hanging ... how to do you tell the program it is non-passive (due to short-term rentals), without going into Forms Mode?

[tagteam]

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@AmeliesUncle wrote:

Short-term rentals are non-passive, right?

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I thought we were way past this argument - Schedule E or Schedule C.

What would be considered "short-term" (in Florida, rental periods of six months or less for residential real estate are considered short-term)?

Are we referring to the 7-day and 30-day rules? So, for example, if I rent my beach condo for 30 or fewer days on average but without providing significant personal services the income is nonpassive? 

[AmeliesUncle]

I am trying to get the OP's question answered.  The OP said average rental is less than 7 days, and no services.

No services means Schedule E.  But less than 7 days (and Material Participation) means it is non-passive, right?

As the OP asked, HOW do you tell that to TurboTax (without going into Forms Mode).

[tagteam]

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@AmeliesUncle wrote:

I am trying to get the OP's question answered.  The OP said average rental is less than 7 days, and no services.

No services means Schedule E.  But less than 7 days (and Material Participation) means it is non-passive, right?

As the OP asked, HOW do you tell that to TurboTax (without going into Forms Mode).

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You are correct; you need Forms Mode to make that particular selection.

However, do not blame the TurboTax developers (or legal) because they are most likely just reading the regs and applying them literally (broadly or overbroadly, if you prefer).

The relevant reg states that rental periods of less than seven days are not treated as rental activities and, hence, get Schedule C treatment (i.e., Schedule E is used to report income or loss from rental real estate, et al).

Again, we have had this discussion before about this position, and I agree with your position, but there are many others who diverge. On their side, the reg could simply have stated that the activity is nonpassive but, rather, the reg states it is not even a rental activity (and if it is not a rental activity, how could the correct treatment be to report it on Schedule E?).