Rental Property

[Looney1966]

I have a Retail store (LLC) on my property that I charge rent to for the building and then claim the rent on my personal taxes under Schedule E. Is that considered self-rental subject to recharacterization rules?  And if I have a profit on that rental is that considered non passive income?

[Carl]

I have a Retail store (LLC) on my property that I charge rent to for the building

Do you own the entity that pays the rent? If so, what kind of entity is it? Sole proprietorship? single member LLC? multi-member LLC? Partnership? S-Corp? C-Corp? Something else maybe?

Is "my property" your personal residence? Or is it commercial property that you own?

Basically, all income from all sources reported on SCH E is passive income. Period. But depending on your specific and explicit situation, SCH E may not be the right place to report the income.

[Looney1966]

I have a Retail store (LLC) on my property that I charge rent to for the building

Do you own the entity that pays the rent?  YES I OWN AND IT IS ON MY PROPERTY - I HAVE A RETAIL STORE IN THE BUILDING - SINGLE MEMBER LLC.

If so, what kind of entity is it? Sole proprietorship? single member LLC? multi-member LLC? Partnership? S-Corp? C-Corp? Something else maybe?  - SINGLE MEMBER LLC - SOON TO BE PARTNERSHIP

Is "my property" your personal residence? Or is it commercial property that you own? IT IS A BUILDING ON MY PERSONAL PROPERTY THAT I HAVE HAD A BUSINESS ON FOR 10 YEARS.  

Basically, all income from all sources reported on SCH E is passive income. Period. But depending on your specific and explicit situation, SCH E may not be the right place to report the income.  I WAS READING THAT IT IS UNDER SCHEDULE E BUT IT IS CONSIDERED SELF-RENTAL AND SUBJECT TO RECHARACTERIZATION RULES?

[Carl]

If you the owner "materially participate" in the business that pays the rent, then yes, it's subject to the re characterization rules.

@Hal_Al I'm a bit fuzzy in this particular area. Other than my statement above, that's all I really know about this aspect of rentals.

[Anonymous_]

---

@Looney1966 wrote:
 And if I have a profit on that rental is that considered non passive income?

---

The "self-rental rule" states that rental income is nonpassive while rental losses continue to be passive.