Have a short term rentals and what it means for your taxes?
What the IRS considers a short term rental?
Anything rental period of 7 days or less. This includes condos, cottages, cabins, lake or beach homes, ski lodges, and similar properties.
No this is not a one time deal, this magical 7 day rental number comes from an average through the year. Say you have a beach home and you rent it 15 times during the year, for a total of 85 days. Your average rental is 5.7 days. That’s an average of seven days or less for the year.
Something of note: If you use this property for personal use, this changes how this property is categorized.
What does this type of property mean for your taxes?
Due to, these rental lengths, you do not qualify as a real estate professional. Therefore, any loss you incur can not be a deduction on your schedule E for your taxes.
Something of note: check our previous article about qualifying as a real estate professional, it might not be easier than you think. This may save you from not being able to deduct any losses you may incur on this property.
The IRS
During an audit, an IRS examiner will question whether or not you do qualify as a real estate professional. This will be key in how and what you can deduct losses on this property.
Need help figuring this all out? We can help contact us at Contact Us or email us directly at info@cdprofessionalservices.com