Are STRs & MTRs Considered Active Income? Do they need Separate LLCs from LTRs?
After having a consultation with a company that sets up LLCs, I'm now questioning if I truly have the right LLC formation for the purpose of my business. For context, I created one LLC to run a mix of STR and MTR properties. Right now, I have a tenant who originally was only supposed to be in one of my units for 6 months, but she recently extended her stay another 6 months. Due to the fact that it's a fully furnished rental that I intended to run as a MTR/STR, I've been funneling all of the costs for that rental under the LLC, including the renovations and upgrades of the home.
I also have another unit behind that first unit that I recently renovated from a detached garage to a studio apartment, and I've been renting it out on a website called Peerspace, for productions, photoshoots and small events. It will also eventually become a furnished MTR or STR, but as of now it's being used for the purpose described above. I've also been funneling those rental costs through the LLC.
For both of my units, I have been the only one managing every aspect of the renting process, from setting up listings to collecting rent, doing repairs, etc. The only thing I've contracted out thus far is the cleaning of the units. Also to note, that I have not filed taxes on the LLC yet, because I just officially started renting it out as an investment property in January 2023. In 2022 I was mostly doing repairs and renovations on the home and back unit (and living in the main home as my primary residence).
I was told by a CPA that legally a LTR is anything over 7 days, and anything under that is considered STR from a tax standpoint. I thought it was anything 12 months or longer, especially considering most lenders won't accept 6-month leases for rent purposes. So now I'm confused as to:
1) What exactly is considered a LTR from a tax/legal standpoint in terms of length of stay?
2) Does an LTR require a completely separate LLC because it's passive income? What makes it passive vs active?
3) Are both MTRs and STRs considered active income, and thus need their own LLCs? Can they both be lumped under 1 LLC?
4) For sites like Peerspace where you're using your home to rent out for services for just a few hours, is that considered a STR or something completely different? If the latter, does it also need its own LLC?
5) If I want to add consultation services to the MTR/STR LLC (I'm getting a lot of requests for this), is that allowed or do I have to create a separate LLC for that too?
6) I had a cost-segregation done on this property in December 2022, is this included on my business taxes or my personal taxes?
I know this is a lot but I never seem to get clear answers and I'm trying to make sure I set everything up correctly before I make this any harder on myself come tax season. Thanks for any responses!