If a client rents out 3 rooms in their home, Do i report each room rental on a separate Schedule E?

[karteroko]

Client rents out 3 rooms, each room was rented out for different total days for the year. The start date in renting each room are different also. Should i prepare 3 separate schedule E? Or can i just report them all in a single Schedule E? Thanks for the help.

[BobKamman]

So we know the start dates were different, because you told us.  Were all the rooms still rented, or available for rent, on December 31?  By "start date" do you mean when the first tenant moved in, or when it was first advertised?  And are you sure this belongs on Schedule E?  Are these Airbnb-type short-term occupancy deals that belong on Schedule C?  

[dkh]

Are these rooms rented out for less than 15 days per year - like for local college football games  ?  

Special rules exist for this type of rental income/expenses - not reportable.

[TaxGuyBill]

What about personal use?  Were they used for personal use after they were available for rent?

The more details you can provide about the situation, the better we can help you.

[karteroko]

Hi! The rooms are for normal renting and not AirBNB. They were rented 306, 366 and 145 days respectively for 2020. My reference to the start date is for depreciation purposes. There was no personal use even when not rented. Thanks for the help.

[sjrcpa]

Were they all held out/available to rent on Day 1?

[TaxGuyBill · Accepted solution]

If one or more rooms will ever have personal use and/or be converted back to personal (while the others are still rented), I would keep it as three different properties with three different Schedule E worksheets.

If they will all be 100% rental for the long term, or if they are converted to personal use they ALL will be converted to personal use, I would put everything on one Schedule E worksheet.

As for depreciation:  In the first situation above, use three different worksheets.  The "placed in service" date is when it was first AVAILABLE for rental.

In the second situation above:  If the rooms were AVAILABLE at different times, technically you should do three different worksheets.  However, due to the very minor difference, I suspect I would just lump it all onto one worksheet.  CAGMC.

[taxmo]

That's an old comment, but just so no one else reads that and confused, Airbnb short-term rentals do not go on Schedule C, they still go on Schedule E.  The only time it goes on Schedule C if you provide "substantial services", which means services during guests' stays, such as daily cleanings during their stay like a hotel (not just between guests), or meals.  But that is very rare.

[BobKamman]

Just so no one else reads @taxmo 's comment and is confused, there is no "safe harbor" rule that can be relied upon for distinguishing between Schedule C and Schedule E.  Most of the online speculation appears to be based on a 2021 Letter Ruling from IRS which, as always, notes "This advice may not be used or cited as precedent."  

https://www.irs.gov/pub/irs-wd/202151005.pdf

This Letter Ruling presents two fact situations, both based on average stays of 7 days.  Many Airbnb hosts average much shorter stays.  The letter ruling relies on court cases that involved trailer parks.  Consider it for what it's worth, which is not much.  But for now, there's nothing better, other than the always reliable "it depends on the facts and circumstances of each case."