I have a vacation condo that I exclusively rent out. Average rental term is less than 7 days.
When I got this property, the guidance was that short-term rentals like this go on schedule C, and that's the way I've been doing it.
I notice, though, that schedule E has a property type of "vacation/short-term rental" as one of the property type selections.
So now I am unsure... have the rules changed? Should this property go on schedule C or schedule E?
Thanks.
I don't think there is any "official" definition of these terms. But "short-term" as used on Schedule E probably means anything less than 30 days. The "7 days or less" situation would be a subset of that.
But since "7 days or less" is defined by regulations as being NOT a "rental," the use of Schedule C would be (and continues to be) appropriate. And a net profit on such a situation would presumably be subject to self-employment tax (since it isn't an excludable "rental).
I'm pretty sure that the "short-term rental" of a resort unit is still a real estate rental for self-employment tax purposes unless the owner provides services to such a degree that the activity isn't considered a "rental" anymore. The seven-day short-term rule isn't to be found in the SE tax rules of section 1402, it's only in the passive/nonpassive activity rules of section 469.
I agree that there could be some "nuance" on the SE tax issue.
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