How is Vacation Rental Income Taxed? Diff than Long term rentals?

Question

I am new to vacation rentals but have numerous long term rentals. My question is this, is the income I get from a vacation rental taxed differently than the income I get from my long term rentals? If so what is the difference?

Thanks All!

Al Williamson · Answer

@Aaron Cooper you're going to get an array of answers here. Please check with your tax adviser for theses types of questions.

And if you don't wish to do that then take the most conservative path.

Best to you.

PS - I hear @amanda haun says short stays are taxed differently.

Randall Brown · Answer

losses from active income can offset e.g. a spouse's W2 income.. it is advantageous to call it active vs passive..

Gita Faust · Answer

As far as I know it is still the same in reference to taxes.

Aaron Cooper · Answer

Thanks Beth.  I was told my vacation rent was classified as active income but rental income is considered passive income.  So I am trying figure out what the truth is behind it.

How do you like vacation rentals vs long term.

Beth L. · Answer

@Aaron Cooper we have both vacation rental and long term rental income. Both are itemized on our Schedule E and run through our personal tax return as RENTAL INCOME. Perhaps this could be different, depending on how your entity is set up. Definitely a question for your CPA if you want to be sure.

Jeff B. · Answer

As I understand, vacation rentals are taxed as regular income, whereas LT rentals are on schedule E.