Schedule C or E for vacation rental.

[candycanepanda]

It should be on Schedule E typically.  

[DiddlyD]

A "short term" rental (nightly/weekly occupancies less than 30 nights) has to charge the same tax as a hotel/motel (hospitality businesses) and is considered transient accommodations which requires constant management is considered you are "in business"  and is reported on schedule C and possibly subject to self employment tax Ref: "An activity qualifies as a business if your primary purpose for engaging in the activity is for income or profit and "you are involved in the activity with continuity and regularity". 

IRS will ultimately decide where your rental falls into based on your circumstances.  But if the same vacation rental was rented" long term" (30 nights or more) that include utilities, furnished, etc. but you don't provide any personal services as in maid service, meals, etc. you would report on Schedule E "Rents and Royalties".

[DiddlyD]

Active vs passive participation is another issue all together.  You can have a short term vacation rental business and be passive using property management or a REIT in that business so lets not confuse people with adding that to the plate.  

[DiddlyD]

lets just cut to the quick, this is all about "short Term" rentals that mostly rent on Homeaway and Airbnb by the night(s) or week(s), that are basically operating as a subset of the hotel and motel business  call transient lodging, whether they offer other services too is irrelevant to the main purpose of where do you report your vacation rental income on Schedule C or E. Short term rental is high maintenance and is required to charge a hotel tax rate and needs to be reported on schedule C the same as hotels do.  Long term vacation rentals (30 days or more) are categorized as a regular housing rentals even though it's furnished as long as you don't cross the line into services and short term renting you would reported on Schedule E.

[DiddlyD]

If you didn't rent it for longer than you used it as a residence, you can not report expenses on it. 

[Carl]

There's a difference between provided and performed. There's nothing that says the owner has to perform services beneficial to the tenant. It states the owner must provide services. It doesn't matter who or what performs those services. When a rental activity qualifies as a SCH C business, those services provided are typically in the lease agreement. That way if audited on it, the owner has somewhat undeniable proof.

[Dillingham PLLC]

---

@AmeliesUncle wrote:That comment/rule is for determine if it is a rental for purposes of the Passive Loss Rules.  Short term rentals ARE still a "rental activity" for other purposes.

---

This is not true.

This is just an assumption about 1.469.1T(e)(3)(ii), possibly because it says "for purposes of this paragraph" - but you have to back up and look at the whole picture.

§ 1.469-1T General rules (temporary).

(e) Definition of “passive activity” -

(3) Rental activity -

(i) In general. Except as otherwise provided in this paragraph (e)(3), an activity is a rental activity for a taxable year if -

(ii) Exceptions. For purposes of this paragraph (e)(3), an activity involving the use of tangible property is not a rental activity for a taxable year if for such taxable year -

(A) The average period of customer use for such property is seven days or less;

You can see if you look at the entirety of this rule that this is a general rule definition of rental activity -  *Not* a description of Passive Loss Rules.  This means that this is excluded from the general definition of rental activity, thereby excluded from the general definition of passive activity related to rental properties - thereby having absolutely nothing to do with rules attributable to passive activities related to rental activity or anything described in any other section as a rental activity.

By the way - Passive Activity Loss rules are covered later, in § 1.469.2T

§ 1.469-2T Passive activity loss (temporary).

(a) Scope of this section. This section contains rules for determining the amount of the taxpayer's passive activity loss for the taxable year for purposes of section 469 and the regulations thereunder. 

All of that to say, it is not a rental activity when discussing passive activities - and it is not somehow magically an active rental activity and the only form of business that seems to slip past the material participation rules.

*Edit* this was added after the fact and I will expand on this in a follow up reply

So, if it can't be a passive rental activity, and it can't automatically be an active rental active - the only other option is to fall under a trade or business - be it active or passive - which is actually reinforced and explicitly explained in the instructions for Schedule E, Form 8582, Form 1065. Pub 925, and originally elaborated on in Treasury Decision 8175.

*End of Edit*

There is absolutely nothing in the code that contradicts the "less than 7 day" rule - because it is outside the scope of anything discussed as a "rental activity".  Unfortunately, there is just nothing elaborating on  it anywhere else in the code.

All of this leads to the conclusion that yes - activity that falls under the 7 day exclusion rule is absolutely reportable under schedule C.

[DiddlyD]

If you did not provide personal services such as cooked meals, laundry service, house cleaning during their stay, driving them where they need to go etc. You are not in the hospitality business which is like a bed and breakfast or Hotel with room service which you then would report on schedule C; therefore, you only rent and don't do anything more than maintenance as needed even if it comes with linens and cookware and utilities you report on Schedule E Rents and Royalties.

[DiddlyD]

If you did not provide personal services such as cooked meals, laundry service, house cleaning during their stay, driving them where they need to go etc. or rented an average of more than 7 days per stay, report on Schedule E.   You are not in the hospitality business which is like a bed and breakfast or Hotel with room service which you then would report on schedule C; therefore, you only rent and don't do anything more than maintenance as needed even if it comes with linens and cookware and utilities you report on Schedule E Rents and Royalties.

[DiddlyD]

I don't get that, renting is renting it's just does it cross over into something more and reported on your taxes based on a different business model that extends into the hospitality level of accommodations.  Both charge to people to occupy the property/room etc. it's just how much services are included!

[DiddlyD]

I am a licensed business in my state and have an DBA too, but I still report on Schedule E.  Even an LLC can report on Schedule E or C.  But Corps and Inc have to report on Schedule C.   This would take precedence over the issue of providing services and or average length of stay.

[DiddlyD]

You are mixing up things and confusing yourself.  Just figure out if you report on schedule E or C first, and since you are renting an average of less than 7 days for more than 14 days out of the year, you report on Schedule C for short term rentals which are considered transient much like a hotel or motel is.  Then if when you go through the schedule C and asked if you materially participated or not, how you answer that is when the passive or non passive rules kick to determine what other deductions you are entitled too and what limitations too.

[tagteam]

---

@DiddlyD wrote:

 Even an LLC can report on Schedule E or C.  But Corps and Inc have to report on Schedule C.   

---

Corporations (S or C) do not report on Schedule C; they report on Form 1120-S or Form 1120.

Multi-member LLCs report on Form 1065 (generally). 

[tagteam]

---

@Dillingham PLLC wrote:

---

@AmeliesUncle wrote: That comment/rule is for determine if it is a rental for purposes of the Passive Loss Rules.  Short term rentals ARE still a "rental activity" for other purposes.

---

This is just an assumption about 1.469.1T(e)(3)(ii), possibly because it says "for purposes of this paragraph" - but you have to back up and look at the whole picture.

§ 1.469-1T General rules (temporary).

---

I'm thinking @AmeliesUncle would like to refrain from arguing this point, but you might want to chew on the following, @Dillingham PLLC.

When a subsection of a section of the Code or Regulation states, "for purposes of this paragraph", that is precisely what it means; it generally is not applicable to other sections of either.

Moreover, see Section 7805(e) with respect to the expiration of temporary regulations and this one has been around for quite some time.

Finally, note that, although not authoritative, neither the instructions for Schedule E nor Publication 527 mention rental time periods. Rather, both simply state that the activity belongs on Schedule C if the taxpayer provides substantial services or is a real estate dealer.

[AmeliesUncle]

---

@tagteam wrote:

---

Moreover, see Section 7805(e) with respect to the expiration of temporary regulations a

---

Wow, I didn't know that existed.  Thanks.   But I suspect they still have some authority, though, don't they?  For example, many of the Temp Regs are 'split' with a non-Temp Reg (for example, the Final Reg may have paragraphs a, b and e, and the Temp Reg fills in paragraphs c, d and f).

Thanks for explaining that it doesn't go on Schedule C.  To add a couple of other things:  (1) Section 469 itself is for Passive things, and as Tagteam mentioned, the rules in one Section doesn't necessarily directly affect other Code Sections, and (2) when entering "type of property" on Schedule E, it even has an option for Short Term.