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Hi! I have two short term rentals. When I net them together I pretty much have $0 profit. I have 250 hours for each of them on their own...not that it really matters. Do I need to combine these as one enterprise? It seems even if I say both are individual that TurboTax wants me to combine them into one enterprise. Is there a disadvantage to this in the future?

605

Employee Tax Expert

Feb 6, 2024 3:56:09 PM

If you are claiming that your rental activities are a qualified business then you are already treating them as one enterprise. There is no advantage or disadvantage to joining them together or keeping them separate other than tracking income and expenses.

@taxesaretaxing123

Level 3

Feb 6, 2024 4:24:54 PM

@RobertB4444 Thanks so much! With 2 short term rentals for material participation, can I:

(1) combine the hours spent on both units (to meet the spent more time than anyone else) and/or the 500 hour requirement

(2) if I show material participation, then I shouldn't have to pay NIIT, correct?

Employee Tax Expert

Feb 6, 2024 4:32:17 PM

Correct on both counts.

@taxesaretaxing123

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