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Level 10

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.

For the OP:   You need to go into "Forms Mode", go to the Schedule E Worksheet, and check the "Other Passive Exceptions" box.

 

 

And just to clarify for the OP and any other readers what Tageam and I are talking about:

 

The Regulations for PASSIVE LOSSES say that a rental for less than 7 days or less is not considered a "Passive Activity".  But that is under the rules for PASSIVE LOSSES.  So it is not a "rental activity" for purposes of Passive Losses.

 

As Tagteam and I agree, because no services are provided, it still properly goes on Schedule E.  It IS still a rental, but just not a rental for purposes of the Passive Loss rules.  

 

Schedule C is not appropriate because it is not subject to Self Employment Tax.  It IS still a rental, and the rules for Self Employment Tax don't apply to rental (unless services are provided). 

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Level 15

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.

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Level 2

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.

@tagteam  - you said "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)."

 

The instructions for Form 8582 (Passive Activity Loss Limitations) state that if the activity meets any of the 5 exceptions listed, it's not a rental activity (for the purposes of Passive Losses).  Renting for an average period of customer use of 7 days or less is one of the 5 exceptions.  SO, then Form 8582 states that you must determine if your rental of the property is a trade or business activity, which in my case is Yes, then you must determine if you materially participated, which again is Yes in my case.  Form 8582 Instructions then state "If the activity is a trade or business activity in which you did materially participate, report any income or loss from the activity on the forms or schedules normally used".  This then takes us back to Pub 527, which states "If you rent buildings, rooms, or apartments, and provide BASIC services such as heat and light, trash collection, etc., you normally report your rental income on Schedule E, Part I". 

 

So I think that is an additional piece of written evidence to justify your position and @AmeliesUncle's position in the next post that this activity gets reported on Schedule E, not Schedule C.

Level 2

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.

Thank you for the screen shot, this is very helpful.  I had started this year using TurboTax Online, which doesn't have Forms mode, so I will go back to using the Desktop version so I can access this checkbox.

 

Thank you very much to both @tagteam  and @AmeliesUncle, you were both extremely helpful.  Your position matches what my conclusion was after many hours or reading the regs.  

 

Level 15

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 wrote:

So I think that is an additional piece of written evidence to justify your position and @AmeliesUncle's position in the next post that this activity gets reported on Schedule E, not Schedule C.


Yes, @ericjford, we can agree on that. Further, the fact that the 7-day and 30-day "rules" appear in the Section 469 regs is relevant since that section specifically addresses passive activity losses.

 

Also, Section 469 basically defines "rental activity" as any activity where payments are principally for the use of tangible property [emphasis added}.

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