As the title states. Formed a single owner LLC , purchased real estate that has both a commercial rental and residential rentals. Should I file a schedule C or E for the property purchase and repairs made to the buildings?
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When it comes to rental activities, the decision to use Schedule C or Schedule E when filing your taxes depends on the nature of your rental activity. Here’s a general guideline:
Use Schedule C if you are operating your rental activity as a business with the primary purpose of making a profit and you are involved in the activity with continuity and regularity. This is typically the case if you provide substantial services to your tenants, such as in the case of a bed and breakfast or a hotel.
Use Schedule E for reporting income from rental properties where you are not actively involved on a regular and continuous basis. This is the common form for most rental property income which is considered passive.
For example, you would file Schedule C for your short-term vacation rental if:
The average guest stay is fewer than 7 days, or
The average guest stay is fewer than 30 days and you provide guests with “substantial services”
it could be that the commercial rental goes on schedule E (doubtful you would rent for short-term periods and/or provide substantial services while the opposite could be true for the residential property.
in any case, each property is reported in its own column or form
@Johnny265 wrote:
....Should I file a schedule C or E for the property purchase and repairs made to the buildings?
Report the real estate rentals on Schedule E unless you are a real estate dealer or provide significant services to your tenants.
See https://www.irs.gov/instructions/i1040se#en_US_2023_publink24332td0e1083
Generally, rental real estate activity is reported on Schedule E even if it is also a trade or business activity; however, if you provided significant services to the renter, such as maid service, report the rental activity on Schedule C, not on Schedule E. Significant services do not include the furnishing of heat and light, cleaning of public areas, trash collection, or similar services.
If you were a real estate dealer, include only the rent received from real estate (including personal property leased with this real estate) you held for the primary purpose of renting to produce income. Do not use Schedule E to report income and expenses from rentals of real estate you held for sale to customers in the ordinary course of your business as a real estate dealer. Instead, use Schedule C for those rentals.
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