Corduroy Frog Posted September 3 Report Share Posted September 3 For years, the IRS has been trying to squeeze self-employment taxes out of what used to simply be rentals. This latest thing is to declare "short-term rentals" as taxable for SE tax. I'm assuming this means AirB&B and the like. My question: A client (C) owns a suite in Gatlinburg, TN (a heavy tourist location at the foot of the Smokies). He rents it to a management company (M), who pays him a flat monthly charge. (M) in turn rents out the suite to all comers for one night - or more, maybe even a week. M is doing "short-term rentals." What about (C) who is receiving monthly rent? Is C falling into the Short-Term-Rental umbrella? I'm sure the IRS has their own interpretation, but what is the correct answer?? Quote Link to comment Share on other sites More sharing options...
Abby Normal Posted September 3 Report Share Posted September 3 That rule is for hotels and requires substantial support services, like daily maid service, to be subject to SE tax. I'm sure there are court cases. Quote Link to comment Share on other sites More sharing options...
Lee B Posted September 3 Report Share Posted September 3 It also applies to Bed & Breakfasts and potentially could apply to STRs depending on the additional services provided. Quote Link to comment Share on other sites More sharing options...
jklcpa Posted September 3 Report Share Posted September 3 Length of stay, extent of services provided, and material participation are all criteria. Depending on these factors, it could still be passive. I don't place much relevance on mgmt co providing a flat amount each month. That could be a partial amount set in the contract so that owner has a steady income flow, and then settled up periodically. 1 Quote Link to comment Share on other sites More sharing options...
ILLMAS Posted September 3 Report Share Posted September 3 11 hours ago, Corduroy Frog said: For years, the IRS has been trying to squeeze self-employment taxes out of what used to simply be rentals. This latest thing is to declare "short-term rentals" as taxable for SE tax. I'm assuming this means AirB&B and the like. My question: A client (C) owns a suite in Gatlinburg, TN (a heavy tourist location at the foot of the Smokies). He rents it to a management company (M), who pays him a flat monthly charge. (M) in turn rents out the suite to all comers for one night - or more, maybe even a week. M is doing "short-term rentals." What about (C) who is receiving monthly rent? Is C falling into the Short-Term-Rental umbrella? I'm sure the IRS has their own interpretation, but what is the correct answer?? Send me a PM with your email, I can send some material of a training I did three weeks ago. 1 Quote Link to comment Share on other sites More sharing options...
Corduroy Frog Posted September 4 Author Report Share Posted September 4 12 hours ago, jklcpa said: I don't place much relevance on mgmt co providing a flat amount each month. Judy. I am suspicious as well. A flat monthly fee for a management company doesn't seem to fit well with their business plan. I will investigate further with the client. Thanks. Quote Link to comment Share on other sites More sharing options...
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