Article Date:
June 2019

Word Count:



Know These Tax Rules If Your Average Rental Is Seven Days or Less

Do you own a rental property for which the average rental period is seven days or less for the year?


Such properties can include condominiums, cottages, cabins, lake or beach homes, ski lodges, and similar properties.


If the period of average rental is seven days or less, you have a vacation hotel of one sort or the other, as uniquely defined by the tax code.


Seven days example. Say you have a beach home and you rent it 15 times during the year, for a total of 85 days. Your average rental is 5.7 days. That’s an average of seven days or less for the year.


This puts you in the vacation hotel areas of the tax code. And yes, there’s more than one possible landing area.


To make the rules come to life, let’s say further that you have no personal use of the property. Your beach home or other vacation rental is either rented or vacant for the day. Here’s what we will examine in this article:



Is your seven-days-or-less-average rental property a business reported on Schedule C or a rental reported on Schedule E?


Do the passive loss rules apply to the seven-days-or-less-average rental property, and can you count the hours spent on this property as participation hours for the purpose of qualifying to deduct rental losses by becoming a real estate professional as defined by the tax code? ... Log in to view full article.

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