Short Term Rental Tax Quandary

[Jackson Larkin]

Hey Bigger Pockets!

My name is Jackson Larkin, great to virtually meet you all! I am a real estate investor up in Richmond, Virginia and I am running into an interesting tax case that I wanted to pick your brain on.

Historically our filing situation has been fairly cut and dry from a real estate perspective but this year we added a short-term rental that I want to make sure I am treating appropriately. 

Here's where it gets weird. The short term rental in question is a Single-Family Home that was built to be a duplex (both units are relatively equal in size). We live full-time in one "unit" and airbnb the other. I believe that we can prove that we materially participate in the property and rent the airbnb for less than 7 days on average; however, deeming this a residential property or non-residential is making my head spin a bit.

Obviously there is a pretty large chunk of change on the line here so I'm hoping to find out how to manage this appropriately. Any advice?

Best,

Jackson