Does your rental property activity meet the definition of a trade or business activity?
If “yes,” your rentals produce the best possible tax benefits.
In general, you report your rental properties on Schedule E of your tax return. When your activity rises to that of a business, you continue to report the rentals on Schedule E, but with the business classification you qualify for
tax favored Section 1231 treatment;
business use of an office in your home;
business (versus investment) treatment of meetings seminars, and conventions; and
Section 179 treatment on your business-use assets.
Rental as a Business
In Levy, the court ruled that the trustees of this estate, by renting the real estate, were engaged in a trade or business. This court then went on to say:
Courts have consistently held that the rental of real estate is a "trade or business" if the ... Log in to view full article.