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Posted by way222 on February 27, 2007, 3:36 pm
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My wife and I bought a condo as an investment in a resort
area. We put it in a vacation rental program, where it is
rented out for periods of typically a week or less. While
we make all the decisions about furnishing, maintaining,
participating in the condo association, etc., the rental
company finds the renters, collects the rents and sends it
to us, and takes a commission from the rent as their
payment.
Pub. 925 says "Your activity is not a rental activity if any
of the following apply: The average period of customer use
of the property is 7 days or less."
We will certainly meet this test.
Is this "not a rental activity" just for form 8582? Do I
not use sched E for this?
I'm uncertain how to do this. Any advice would be
appreciated.
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Posted by Bill Brown on March 1, 2007, 7:06 am
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way...@gmail.com wrote:
> My wife and I bought a condo as an investment in a resort
> area. We put it in a vacation rental program, where it is
> rented out for periods of typically a week or less. While
> we make all the decisions about furnishing, maintaining,
> participating in the condo association, etc., the rental
> company finds the renters, collects the rents and sends it
> to us, and takes a commission from the rent as their
> payment.
>
> Pub. 925 says "Your activity is not a rental activity if any
> of the following apply: The average period of customer use
> of the property is 7 days or less."
>
> We will certainly meet this test.
>
> Is this "not a rental activity" just for form 8582? Do I
> not use sched E for this?
>
> I'm uncertain how to do this. Any advice would be
> appreciated.
First, use Publication 527, Residential Rental Property, to
determine how to report your rental activity, not
Publication 925, Passive Activity and At-Risk Rules. The
latter publication will help you determine when a loss on
the activity may be deducted.
Second, the rental of your condo is, indeed, reported on
Schedule E.
<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>
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Posted by Kreig Mitchell on March 1, 2007, 8:49 pm
Please log in for more thread options way...@gmail.com wrote:
> My wife and I bought a condo as an investment in a resort
> area. We put it in a vacation rental program, where it is
> rented out for periods of typically a week or less. While
> we make all the decisions about furnishing, maintaining,
> participating in the condo association, etc., the rental
> company finds the renters, collects the rents and sends it
> to us, and takes a commission from the rent as their
> payment.
>
> Pub. 925 says "Your activity is not a rental activity if any
> of the following apply: The average period of customer use
> of the property is 7 days or less."
>
> We will certainly meet this test.
>
> Is this "not a rental activity" just for form 8582? Do I
> not use sched E for this?
You will understand the transaction better if you view your
property as a "hotel," because that is what you might be
deemed to be operating. In that case you are talking about
a business, not an investment. The tax consequences will
hinge on whether you earned a profit or incurred a loss (and
what the average rental period and/or total personal use
period was). Your tax accountant should be able to walk
you though the mechanics.
Kreig Mitchell
www.irstaxtrouble.com
www.irstaxtrouble.com/blog.htm
<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>
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Posted by way222 on March 3, 2007, 4:48 am
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> You will understand the transaction better if you view your
> property as a "hotel," because that is what you might be
> deemed to be operating. In that case you are talking about
> a business, not an investment. The tax consequences will
> hinge on whether you earned a profit or incurred a loss (and
> what the average rental period and/or total personal use
> period was). Your tax accountant should be able to walk
> you though the mechanics.
Like most rentals, it's unlikely to show a profit after
depreciation for at least several years, maybe ever. In
fact, for 2006 this property had zero income because it
wasn't on the market until December, and not many people go
to the beach in December.
Personal use for 2006 was zero, personal use for 2007 will
most likely also be zero.
For a regular house, it's a no-brainer, but that 7-day
average rental thing, along with very confusing material
participation, active participation, and real estate
professional rules, have left me unsure about what to do.
My best guess right now is that it goes on schedule E, but
it is an "Other Passive Activity" (line 3 on part 1 of
8582), which hoses me tax-wise a bit. I'd love to get it on
my wife's Schedule C (she is a full time RE agent (1099
Misc) who also manages all of our rentals; that would really
help me.
<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>
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Posted by scott s. on March 4, 2007, 8:50 pm
Please log in for more thread options way222@gmail.com wrote:
> My best guess right now is that it goes on schedule E, but
> it is an "Other Passive Activity" (line 3 on part 1 of
> 8582), which hoses me tax-wise a bit. I'd love to get it on
> my wife's Schedule C (she is a full time RE agent (1099
> Misc) who also manages all of our rentals; that would really
> help me.
I am in this exact (almost) situation, except in my case the
condo has no cooking facilities, so isn't a "dwelling unit".
But the question is, if you are not in a community property
state is this a deemed partnership bewteen husband and wife,
and can't go on wife's Sked C?
scott s.
<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>
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