What is a short term rental requiring material participation? - John R. Dundon II, Enrolled Agent
8073
post-template-default,single,single-post,postid-8073,single-format-standard,bridge-core-3.0.1,qodef-qi--no-touch,qi-addons-for-elementor-1.5.3,qode-page-transition-enabled,ajax_fade,page_not_loaded,,qode_grid_1300,footer_responsive_adv,qode-content-sidebar-responsive,qode-theme-ver-28.7,qode-theme-bridge,qode_header_in_grid,wpb-js-composer js-comp-ver-6.9.0,vc_responsive,elementor-default,elementor-kit-269
 

What is a short term rental requiring material participation?

What is a short term rental requiring material participation?

A ‘Short Term Rental’ usually involves Condos, B&B’s, Hotels, Etc.  These ‘short term rentals’ fall outside of the definition for tax purposes of rental real estate.  As such these investments are treated as a business and the owner must materially participate in order to recognize tax losses.

If the average use is 7 days or less or if average use is 30 days or less, and significant personal services are provided, then activity is not treated as rental real estate. There is no $25,000 offset for passive activity losses.  If the taxpayer does not materially participate losses are not deductible unless taxpayer has passive income which is rare. Losses go on IRS form 8582 line 3b, not line 1b.



Share