Short term rental depreciation

[Superaledh]

I have a short term rental, that I do not use as a home, stay in less than 14 days or 105 of rented days.  I am not a real estate professional, but materially participated and have an average rental of less than 7 days, so this is a trade or business activity, not a "rental activity" according to IRS pub 925.  

Depreciation should be over 30 years, but when using TT, I seem to only have the option to enter depreciation as a nonresidential business property with depreciation over 39 years....

Where/how do I enter the correct 30 year (ADS) depreciation schedule?

Where / how do I 

[Superaledh]

Sorry the first sentence should read:

I have a short term rental, that I do not use as a home, stay in less than 14 days or 10% of rented days.

[ThomasM125]

You would have to set up the rental as a business as opposed to a rental activity. So, it will show on schedule C rather than schedule E. When you add the asset, you will choose the Other asset type option. Later, you will see an option to choose the asset class, one option of which will be 31.5 years.

[Anonymous_]

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@Superaledh wrote:

I have a short term rental, that I do not use as a home, stay in less than 14 days or 10% of rented days.

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You still need to divide your rental use and personal use days per Section 280A.

You must allocate your expenses based on the number of days of personal use to total use of the property.

See https://www.irs.gov/instructions/i1040se#en_US_2022_publink24332td0e938

The rental does not belong on Schedule C unless you provide significant services to your renters (or are a real estate dealer).

See https://www.irs.gov/instructions/i1040se#en_US_2022_publink24332td0e1083

[Superaledh]

Thanks Thomas, I will look at this option to see if I can choose the correct depreciation schedule of 30 years, mid month and ADP according to pub 527.

[Superaledh]

Thanks Tagteam - I will look at section 280 again, but think I am good there.  I also believe that according to pub 925, short term rentals qualify as a business activity i.e., can go on schedule C if you provide significant services as you mention OR the average rental period is 7 days or less.  

[Superaledh]

Hi Thomas,

I don't see the screen you are showing, mine looks like the following:

It doesn't matter which of the 4 I pick, I don't see a place where I can select the asset class as appears in the picture you shared.  Can you direct me to this?  FYI, I am using Home & Business on a Mac.

Thanks!

[Anonymous_]

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@Superaledh wrote:

.......OR the average rental period is 7 days or less.  

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I disagree and I laid out my rationale, based upon the IRC and Regs, in another thread.

However, that is my opinion based upon my interpretation of current law and opinions vary widely on this issue which, to my knowledge, has not been raised in any court cases.

[also note that IRS publications are not authoritative]

[Anonymous_]

See https://ttlc.intuit.com/community/investments-and-rental-properties/discussion/re-material-participa...

[Superaledh]

Thanks for the additional information.

I am still trying to see how/where to enter the depreciation correctly - can you. provide any insight on that?

Thanks

[Anonymous_]

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@Superaledh wrote:

I am still trying to see how/where to enter the depreciation correctly - can you. provide any insight on that?

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I am not using a Mac, so I am not sure if the program varies in that respect. 

Obviously, you would enter a percentage which is in the assets/depreciation section of the Windows version of the program.

[Anonymous_]

@Superaledh 

Also, if you are trying to enter the asset (rental property) on Schedule C (i.e., the Business Income and Expenses tab), you will have to select Intangibles, Other property and then Other asset type on the following screen for your purposes.