When managing rental properties, the tax implications differ significantly between short-term and long-term rentals. Understanding these differences can help you make informed decisions about your property investments.

Long-Term Rental Properties

Long-term rentals are properties rented for periods longer than 30 days. These properties receive traditional rental income treatment under tax law.

Income and Expenses: Your rental income is reported annually on Schedule E of your tax return. You can deduct ordinary and necessary expenses related to managing and maintaining the property, including:

Property taxes and insurance Mortgage interest Repairs and maintenance Utilities (if you pay them) Property management fees Depreciation of the property

Short-Term Rental Properties

Short-term rentals are properties rented for periods of 30 days or less. These properties may be subject to different tax rules depending on how frequently you rent them out.

The "14-Day Rule": If you rent your property for 14 days or less during the year:

• The rental income is tax-free
• You cannot deduct rental expenses
• You can still deduct mortgage interest and property taxes as personal deductions

For properties rented more than 14 days:

• All rental income must be reported
• Expenses must be divided between personal and rental use
• Special rules apply for deducting expenses
• You may need to collect and remit local occupancy taxes

Material Participation Rules

Your level of involvement in managing the rental property can affect your tax treatment:

Short-term rentals often qualify as a "business" if you:

• Provide substantial services for guests