IRS RV Lot rental income?
Info and ideas on TAX implications. what forms to use where to find info.
if I were to buy a RV lot and build a Casita (day house) with bath, laundry no kitchen or sleeping area. Concrete slab and full hookups, and rent it to a Winter Texan (snowbird), how do I handle the IRS. The expenses without any deprecation would be more than the income. No interest exp. Power, water, property owners, tax, and insurance. Rented 5 mo. of the year, used by me 1 mo., and tools and other stuff stored year round. Any ideas or suggestions ? |
For liability reasons you should hold the property in a LLC.
Rental Income/Loss would be reported on schedule C. Any loss would reduce your AGI (taxable income) Keep complete records of everything because business entities that are operated at a loss year over year are a red flag for audit. Since the loss might be small I would still hold the property in a LLC but you could "forget" to report the income or claim a loss. This will allow you to not depreciate the property and keep it at the original cost basis + improvements when you sell it, ergo pay less in capital gains taxes then. |
Thanks
The property will likely not be sold but inherited so the basis would be readjusted. The LLC is a good idea. It would be easy to forget as the paperwork would not justify the small loss, but the IRS might not agree. I know a loss for years shows up as a red flag. |
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Under no circumstances should you report the rental income under Schedule C. That form is used for what is referred to as a "trade or business" and rentals of real property are not trades or businesses. |
Here's the specifics on vacation rentals. This is directly from the IRS website.
Tax Topics - Topic 415 Renting Residential and Vacation Property If you'd like any clarification, let me know. |
Wnytaxman
I did not think it met the requirements for a dwelling unit, it has no kitchen or sleeping area. It has 2 garage doors, a walk door. a 3/4 bath and washer dryer. I would store woodworking tools and car parts in it. I also would store a car and golf cart in it during the summer. Is this considered personnel use? My MH would park there less than 14 days a year as I have a House 2 blocks away and put the MH in storage when I am in TX. The rental income would be less than $1800 a year loss only a few $100. A lot of paper work to keep the IRS happy. Thanks for your replies. |
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