Small Business Tax Savings Podcast How Are Short Term Rentals Taxed?
Aug 10, 2022
Discover what the IRS considers a short-term rental and the unique tax treatments that apply. Explore the pros and cons of reporting short-term rental income on Schedule C versus Schedule E. Learn strategies for navigating the tax implications of real estate while maximizing your savings. Plus, uncover invaluable resources and programs designed to help you manage real estate taxes more effectively!
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14-Day Home Rental Tax Strategy
- Rent your personal residence for 14 days or less per year to earn tax-free income.
- This strategy, known as the Augusta rule, is beneficial for business owners for tax deductions.
IRS Definition of Short-Term Rental
- The IRS defines a short-term rental as one with an average rental period of seven days or less.
- Calculate it by dividing total rental days by the number of rental occurrences.
Substantial Services Determine Tax Form
- Provide substantial services like hotel-like cleaning and maid services to report short-term rentals on Schedule C.
- Without substantial services, report the rental on Schedule E for tax purposes.