Short term rentals- active or material

Forum|Forum|1 month ago
July 13, 2026
8 replies
126 views

Working on a 2024 return and had to show “active” participation for the program to allow losses in excess of total rental income for two short term rentals It appears from research that the correct choice is “material”, but that choice will not allow the losses

ProSeries Professional

Best answer by TaxGuyBill

Assuming that “services” are NOT provided to the tenants, it is on Schedule E.

Does the client Materially Participate (see link)?

https://www.irs.gov/publications/p925#en_US_2025_publink1000104581

If yes, then the short-term rental is NOT passive. Check box “G” for Other Passive Exceptions.

If no, then check the Active Participation box.

sjrcpa

Level 15

Why do you think the losses should be allowed?

The more I know the more I don’t know.

S

Skylane

Intuit Community Champion

Active. Have you looked at passive activity loss limitations ?

If at first you don’t succeed…..find a workaround

BobKamman

Level 15

Is this the start of another AirBnb/Vrbo debate on Schedule C vs Schedule E ?

M

MaryMattAuthor

Level 4

Taxpayer fell below income threshold, and would be allowed up to 25,000 loss. I think they should be allowed regardless of classification, but only way I could get it to work was to say “active”. I wasn’t thinking of Sched C. Pub 25 does state activity isn’t a rental if average use is below 7 days.