I've heard conflicting things about whether or not STR rentals are considered "passive" investing. I listened to a real estate CPA podcast recently that said if you average 7 nights or less per rental contract for an STR, plus participate in the renovating, stocking, managing renters, and maintaining of the property then you are actually in an "active" business and can bypass having to qualify as a "real estate professional" and track your hours, activities. Anyone have solid facts on this? (I certainly do not want to get audited by the IRS!) Thanks.
Search this forum for “schedule c vs schedule e” and you shall find what you’re looking for
It is a simple schedule E business deduction.
@Luke Carl - thanks for the tip!
If your average stay is below 7 days and you provide 'substantial services', you are more like an active business/hotel.
Your income is not considered passive and your income would be subject to SE taxes.
Depending on if you have rentals that are long-term(especially if they are passive and operating at a tax loss), it may be bad to have the income from your STR be considered non-passive as you won't be able to net the two.