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Schedule E or Schedule C for this business?

Level 2

I have a new client who is in the business of short term residential rentals.  However, she does not own any property, rather she rents several units herself, furnishes them, then sublets them via sites like Airbnb.  She will also occasionally list units under her account that she neither owns or leases, at the request of owners who are looking to make some extra income.   Previous accountant filed Schedule E listing each individual unit and the rental income and expenses attributable to each, with no depreciation.  The only "substantial services" she provides to tenants would be the regular cleaning of each unit after each stay.  What do you think?  Would you keep this on Schedule E or does this seem more like a Schedule C business?  Thanks!  

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5 Comments 5
Level 15


Slava Ukraini!
Level 10

It sounds as if your client is in the business of being a broker and not in the real estate rental business.

As Ironman said...Sch. C

Level 15

I generally start my research at the H&R Block website.


(Inside joke)

But it's not that clear about "substantial services."  Most Airbnb rentals don't include daily cleaning (of course, many hotels aren't doing that either, these days).  But then, since the places are furnished, does that put it on Schedule C because of short-term rental of personal property?

Meanwhile, the TurboTax website is wishy-washy on this.  "When you rent out your home, make bookings and provide amenities, like coffee or breakfast, the IRS may treat you as being self-employed in the vacation rental business."  (Emphasis  added.)


Level 10

Thanks Bob, problem solved!

According to TT providing coffee is a substantial service!!

Level 15

@Camp1040  No, it depends on whether there is sugar and cream.  (Powdery white chemicals don't count.)