Sch E or Sch C

[Bonnie]

Taxpayer and his wife bought a Condo in the beach in Alabama and rents it as an Airb&b. Not much income for 2019 but will be much more for 2020. I'm trying to decide if this should go on a Sch E as rental property or Sch C as a business. If it can be Sch E avoids the SE tax. Not sure which way to go with this one. I've never run into this before

[terryats]

Schedule E unless you provide substantial services such as: Then you use schedule C

• Cleaning of the rental portion of the property while occupied (e.g. linen service)
• Concierge and trip planning services
• Tours and outings
• Meals and entertainment
• Transportation
• Hotel or Bed-and-Breakfast like services.

[Twin Turbo Z]

Schedule E is my vote. Airbnb just handle the day to day crap. Be sure they keep track of personal use.

[ATSMAN]

Before deciding if it is a Sch C or Sch E, I would look at other factors such as any other properties that they rent. Is this the only property they rent? Is it their intention to be in the AirB&B business long term or they just want to try out AirB&B instead of renting out themselves or through a rental agent/broker.

I may go Sch E first and then in a year or two see if Sch C is appropriate.

[terryats]

The devil is in the details, I don't think voting works for the IRS. here is a good guide: https://assets.airbnb.com/eyguidance/us.pdf

[Lion]

What services do they provide? Do they provide breakfast, as B&B imply?

[TaxGuyBill]

Schedule E unless you provide substantial services such as: Then you use schedule C

• Cleaning of the rental portion of the property while occupied (e.g. linen service)
• Concierge and trip planning services
• Tours and outings
• Meals and entertainment
• Transportation
• Hotel or Bed-and-Breakfast like services.

As terryats says, the determination is based in if "services" are provided or not. Nothing else matters; it is just based on if "services" are provided.

Unfortunately, the term "services" isn't a clear-cut definition.

[Bonnie]

Thank you all for your response. No other rental properties and no services provided. No meals it's not a B&B.

[yolanda]

Can a non custodial parent claim head of household on a return? Mother of child is willing to sign form 8332, but the child did not live with non custodial parent more than half a year. Non custodial parent does pay more than half of child's support.

[Rapid Robert]

I don't have time to research this issue, but I seem to recall a relevant factor may be how long/often the property is "rented."

That has to do with whether a rental is automatically considered to be passive, not whether it is a trade or business. Two completely separate code sections.

There is nothing about AirBnB rentals that hasn't been fully addressed in the tax code for many decades prior to AirBnB. People who rent out homes in resort areas for a week or less at a time, where the renters are required to leave the property in the same condition it was when they arrived, are not providing a service or running a business. This was true before AirBNB and is still true now.

[Rapid Robert]

As for drawing conclusions from the original post, "assuming facts not introduced as evidence" comes to mind.

Per the OP, " No other rental properties and no services provided. No meals it's not a B&B."

You in fact are the one who introduced the notion of the duration of the rental being a factor. No facts have been provided in that regard. As TaxGuyBill said, "the determination is based in if "services" are provided or not. Nothing else matters; it is just based on if "services" are provided."

You can get your tax knowledge from "votes" if you wish, I prefer to deal with what's in the code and pubs.

[WICPA]

I think you have to look at the seven day or thirty days rules. If the average stay is seven days or less it should go on Schedule C. The substantial services comes into play when you are applying the thirty day rules. I would hope they are providing linen service and cleaning between rentals.

[TaxGuyBill]

I think you have to look at the seven day or thirty days rules. If the average stay is seven days or less it should go on Schedule C. The substantial services comes into play when you are applying the thirty day rules. I would hope they are providing linen service and cleaning between rentals.

Those rules are for determining if the rental is "passive" or not.

For determining if self-employment tax is due (Schedule C versus Schedule E), the average length of stay is not a factor. It is only if "services" is provided or not.