Personal property includes equipment, vehicles, furniture—anything used in a business that is not real property or a real property fixture.

Personal property rentals are treated differently from real property rentals for tax purposes.

Tax Treatment of Personal Property Rentals

The tax treatment of personal property rentals by individuals depends on how the activity is classified—and there are three possibilities:1

Business

For-profit activity

Not-for-profit activity

Business

If your primary purpose is earning income or profit and you’re involved in the rental activity with continuity and regularity, your rental activity is a business.2 You don’t have to work at a business full time, but it can’t be a sporadic activity.

If personal property rentals are a business, the income generated and the expenses incurred are reported on IRS Form 1040, Schedule C, Profit or Loss from Business.3 The rental income is subject to self-employment tax, like any other proprietorship income. This differs ... Log in to view full article.