Skip to content
×
Try PRO Free Today!
BiggerPockets Pro offers you a comprehensive suite of tools and resources
Market and Deal Finder Tools
Deal Analysis Calculators
Property Management Software
Exclusive discounts to Home Depot, RentRedi, and more
$0
7 days free
$828/yr or $69/mo when billed monthly.
$390/yr or $32.5/mo when billed annually.
7 days free. Cancel anytime.
Already a Pro Member? Sign in here

Join Over 3 Million Real Estate Investors

Create a free BiggerPockets account to comment, participate, and connect with over 3 million real estate investors.
Use your real name
By signing up, you indicate that you agree to the BiggerPockets Terms & Conditions.
The community here is like my own little personal real estate army that I can depend upon to help me through ANY problems I come across.
Tax, SDIRAs & Cost Segregation
All Forum Categories
Followed Discussions
Followed Categories
Followed People
Followed Locations
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback

Updated 7 months ago on . Most recent reply

User Stats

9
Posts
3
Votes
Anna Nevarez
3
Votes |
9
Posts

Can an LLC report one rental on Schedule C and the other on Schedule E?

Anna Nevarez
Posted

I hold two properties in an LLC, one property is currently a STR with less than 7 night rental on average and I provide hotel-like hospitality services and materially participate. I just acquired it and would like to report this property on Schedule C to deduct the loss of first year operations and expenses against my other Sch C business(es) and my husband's W2. The plan is to cease the STR next year and switch to a MTR and thus, I would then report that property on Schedule E.

My other property, which was also recently acquired, is already a MTR, and I would need to report it on Schedule E.

So my question is: can I report one property on SCH E and the other on SCH C even though they are both owned by one LLC? I do my own book-keeping and taxes, so don't have a CPA to consult.

Thanks for any advice!

  • Anna Nevarez
  • Most Popular Reply

    User Stats

    66
    Posts
    63
    Votes
    David Orr
    • Accountant
    • Austin, TX
    63
    Votes |
    66
    Posts
    David Orr
    • Accountant
    • Austin, TX
    Replied

    A single member LLC is disregarded for tax purposes, so the LLC doesn't make any difference.

    It sounds like you might already be aware of this, but the only time you can put a rental property on a Schedule C is if you provide those "hotel-like hospitality services" that you mentioned, which means things like not just cleaning between guests, but daily cleanings during guest stays, and/or providing them with things like meals or entertainment during their stay. You also mentioned that it's an STR with an average stay of less than 7 days, but that's not a factor on whether it goes on Schedule C.

    But just so you're aware, providing hotel-like services so you can put it on Schedule C isn't the only way your rental losses can offset your other Schedule C businesses and your husband's W-2. You can also do that by just having an STR with an average stay of 7 days or less and material participation, without needing to provide hotel-like services. If you do that, it goes on Schedule E like a regular rental, but the difference is that the tax loss isn't limited by the passive activity rules on form 8582. Most professional tax software programs have an option to specify that rental income is non-passive, and that will cause the Schedule E tax loss for that activity to bypass form 8582. There is also a way to do that with TurboTax desktop (but not the online version). In that one, you can go into the forms mode on the Schedule E worksheet, then check the boxes "G - Other passive exceptions" and "D - Material Participation".

    By the way, if the average stay for the year is 30 days or less, you have to depreciate the property over 39 years instead of 27.5.  It can change from year to year depending on the average stay length for the year.  

    It may be a good idea to at least have a tax profession review your tax return to see if there may be any significant mistakes, or opportunities that you may be not aware of.

    David Orr
    Tax Modern

    Loading replies...