This is an excellent read from a CPA who believes most short term rental owners mistakenly report on schedule E versus schedule C.
I donât have a CPA. I do my own. Now with Turbo Tax but in the past I just did them by hand. A pain for sure and no doubt Iâve done things incorrectly many times. I like doing my own because I want to know what the tax laws are and how they apply to me.
My house is paid for and I wonât be doing any more re-financing. Yay!
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I think it could be schedule C or schedule E, depending on the circumstances. A host who does it all, bookings, cleaning, repairs, turnovers etc., is likely a schedule C
A remote host who pays an onsite person for cleanings and turnovers can likely be schedule E
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So this is what they meant by substantial services. I only do one of these. The appliances.
Substantial services can be viewed as amenities and services offered to your guests. If you or your property management company do any of the following, the IRS will likely take the stance that you provide substantial services similar to hotel operations:
Changing linens;
Providing fresh towels;
Cleaning the rooms during a guestâs stay;
Providing appliances such as a microwave, coffee maker, etc; and
Providing vehicles, bikes, or excursion options.
Now I know you donât give your guest used towels - lol!! 
Those are just examples of providing amenities that are similar to hotel operations. Providing snorkel gear to guests would fall under the vehicles, bikes, etc.
I consider changing linens to be the equivalent of providing guests with fresh linens even though they may never changed during the stay.
The IRS has provided guidelines of what is not considered substantial services and that is basically doing things that only a long term landlord would do.
My CPA quizzed me about what I do during the stay⌠and asked, did I cook breakfast, did i change linens daily or do daily cleaning? I said no to all of these⌠She said I wasnât a hotel. Oh well, in the end it worked out for me, because I really donât have that many expenses to write off for the studio that I donât already take for my writing business. I also pay self employment taxes through the writing business so I doubt it will trigger an audit. I think a lot of people worry if they do E it will trigger an audit.
Like the article pointed out, this is relatively new territory and the all the regulations may not have caught up to the industry yet.
Same-same for me, including Turbo Tax. (I donât do any of the financial stuff thoughâŚitâs handled by the belcher across the table.)
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Yes; I agree w that;however the pivotal issue is whether your guests stay longer than 7 days.Mine dont;the vast majority of my stays are under that;will see what my CPA says in JUne and I will report back!
We rent rooms in our home on Airbnb, almost exclusively for less than 7 days. I think we had one 7 day reservation last summer. Anyway. We filed Schedule E this year, at the urging of the tax experts at TurboTax, though it is pretty clear to me that this type of short term rental falls under Schedule C.