Rental Property activity is generally treated as a passive activity regardless of whether the taxpayer materially participates in the activity. This means that you may not be able to deduct a net rental loss from other sources of income! The maximum individual deduction is limited to $25,000 and is reduced when Adjusted Gross Income (AGI) exceeds $100,000 and is completely eliminated when AGI reaches $150,000 ($75,000 for a single person).
A taxpayer's rental real estate activity is not considered passive activity, however, if the taxpayer is a real estate professional. In addition, the rental activity is not considered passive if any of the following tests are met:
- The average customer use of the property is 7 days or less.
- The average period of customer use is 30 days or less and significant personal services are provided by or on behalf of the owner.
- The taxpayer provides property for use in an activity that is conducted by an S corporation in which the taxpayer owns an interest and the activity is not a rental activity.
We can help you incorporate as a Florida Travel Agent which will allow you to take all rental, business, and travel expenses as a deduction for other sources of income. Your short-term rentals involve you in an active travel business and you have the opportunity to earn more income.
Please contact our office at (386)-668-3328 if you would like us to help you incorporate. Or simply complete the attached Incorporation/Travel Agent Form and email or fax to us to start your new business now!