Airbnb rental income taxation

Sure. But if income isn't passive, it's earned. And if it's earned, it's subject to self-employment tax.

Reply to
Stuart Bronstein
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Stuart says "Sure. But if income isn't passive, it's earned. And if it's earned, it's subject to self-employment tax."

And I disagree, wholeheartedly. Nothing about the taxation of rental real estate is *ever* that (over)simplified.

A real estate rental activity with an average "tenancy" of seven days or less may be either subject to SE tax, or not subject to SE tax, and it depends on how much "service" is provided by the landlord.

Reply to
lotax

Yes, I read Hoskins, and the paragraph that you've quoted has *nothing* to do with self-employment tax. If you'll allow me, I'll add something to the last sentence of your quote to illustrate what I'm trying to explain:

"Thus, these properties are not rental activities for purposes of section 469(c)(2) and are considered a trade or business, in which case SE tax applies, or an income-producing activity, in which case SE tax does not apply."

Can you show me otherwise?

Reply to
lotax

One more try. Please read the following example, which follows Reg Sec 1.1402(a)-4(c), Rentals from real estate.

Example. A, an individual, owns a building containing four apartments. During the taxable year, he receives $1,400 from apartments numbered 1 and 2, which are rented without services rendered to the occupants, and $3,600 from apartments numbered 3 and 4, which are rented with services rendered to the occupants. His fixed expenses for the four apartments aggregate $1,200 during the taxable year. In addition, he has $500 of expenses attributable to the services rendered to the occupants of apartments 3 and 4. In determining his net earnings from self-employment, A includes the $3,600 received from apartments 3 and 4, and the expenses of $1,100 ($500 plus one-half of $1,200) attributable thereto. The rentals and expenses attributable to apartments 1 and 2 are excluded. Therefore, A has $2,500 of net earnings from self-employment for the taxable year from the building.

The *only* difference between the two pairs of apartments is that 1 and 2 are rented without services, and 3 and 4 are rented with services. And 1 and 2 are therefore *not* subject to SE tax while 3 and 4 are. In this instance, the length of the rentals is entirely irrelevant. Get it?

Reply to
lotax

Sure. The rental period being an issue is not in the code, it's only a rule of thumb. Enforcement of the tax laws is filled with things like that.

Reply to
Stuart Bronstein

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