TurboTax not recognizing STR non-passive treatment — How do i fix it?

thesenator · ‎April 13, 2026

I have a short-term Airbnb rental (average stay under 7 days) and I materially participate. Under Treasury Reg 1.469-1T(e)(3)(ii)(A) and IRC Section 469, i think this should be treated as a non-passive activity, meaning my rental losses should offset my W-2 income.

TurboTax (both Online and Desktop) keeps treating it as a passive rental and running it through Form 8582, which limits my losses to $0 because my income exceeds $150k. I did have passive losses the prior year from a long term rental.

I've checked Box D (Material Participation) on the Schedule E worksheet in Desktop. Form 8582 is still there and still showing $0 allowed losses.

Has anyone successfully gotten TurboTax to properly treat their STR as non-passive? I prefer the online version because when i sync'd my online version to the desktop version, my rental's net come in oddly 10,000 dollars higher on the desktop version.

AnnetteB6 · ‎April 14, 2026

Double check the days of rental use and days of personal use that you have entered for the property. This entry is a common reason that the rental is automatically treated as passive income.

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thesenator · ‎April 14, 2026

i found this video saying I need to use the desktop version to mark G and D on the Schedule E worksheet which seems to have worked: https://www.youtube.com/watch?v=lcgyK2TSBYQ

A little disappointing i had to buy the desktop version for an additional $115 because the online version doesn't let you, and paid an additional $70 for live support, and they couldn't tell me the change the video had me do in just a few minutes.