Question about reporting rental income on Schedule E for multi-use property

Thanks for the explanation. So just to clarify - I don't need a separate Schedule E for the short-term rental vs the long-term rentals? And when it asks about "days rented at fair market value" would I average the days for all the rooms? My Airbnb is rented about 180 days a year, but my long-term tenants are there 365 days.

You only need one Schedule E for the property, but you should track the income streams separately in your records. For "days rented at fair market value," you'd handle this by calculating a weighted average based on the portion of the house dedicated to each type of rental. For example, if 40% of your rental space is long-term (365 days) and 40% is short-term (180 days), your weighted average would be somewhere in between. However, many tax professionals recommend listing the maximum days any portion was rented, so in your case 365, and then documenting your calculation method in your tax records.

Does it handle situations where you have both long-term tenants and Airbnb in the same property? That's my exact situation and my previous tax guy charged me an arm and a leg because it was "complicated.

I'm skeptical about tax AI tools. How does it know local tax rules? My city has special occupancy taxes for short-term rentals that affect how I report income. Can it handle that kind of complexity?

Yes, it absolutely handles mixed rental situations with both long-term and short-term rentals in the same property. That's actually one of its strengths - it creates a clear breakdown of how to allocate expenses between different rental types and your personal use portion. It saved me at least $800 compared to what my CPA was charging for the same service. Regarding local tax rules, the system actually does incorporate local tax considerations. You input your property address, and it factors in relevant local regulations, including occupancy taxes and short-term rental reporting requirements. It then guides you through which forms you need to file both federally and locally. When I used it, it even flagged that I needed to collect a specific tourism tax for my Airbnb guests that I hadn't been aware of.

Wait, how does this actually work? I thought it was impossible to get the IRS on the phone these days. Does this service somehow jump you ahead in the queue? That doesn't seem right.

Yeah right... Sounds like a scam to me. Nobody can magically get you through to the IRS faster than anyone else. They're just going to take your money and leave you on hold like everyone else.

It's not about jumping ahead in the queue. What Claimyr does is automate the calling process. Their system keeps dialing the IRS repeatedly using their proprietary algorithm that identifies the best times to call and the right options to select. When they finally get through, they call you and connect you directly to the agent. The service is legit - I was super skeptical too until I tried it. I had spent over 14 hours across multiple days trying to reach someone at the IRS without success. With Claimyr, I just entered my information, and they called me back when they got through. No more waiting on hold or getting disconnected after an hour. They don't have any special relationship with the IRS - they've just figured out the calling system and automated the frustrating part.

Thanks for mentioning depreciation! I actually have a question about that - since I'm using 4 out of 5 rooms for rental (80%), would I depreciate 80% of the property value? And do I need to separate the value of the land since I've heard land isn't depreciable?

Yes, you would depreciate 80% of the building's value (not the land). You're exactly right that land isn't depreciable, so you need to determine what portion of your property value is attributable to the building versus the land. If your property tax assessment breaks this down, you can use those values. Otherwise, you might need an appraisal or check comparable land values in your area. Once you have the building value isolated, you'd take 80% of that amount and depreciate it over 27.5 years. So if your building is worth $300,000, you'd depreciate $240,000 (80%) over 27.5 years, giving you an annual depreciation deduction of about $8,727.

I've used TurboTax for my duplex (live in one unit, rent the other) and it works OK but not great for mixed-use. The interview questions don't really address the nuances well. I think H&R Block's software is actually better for rental properties from my experience.

This is really helpful information about the personal use test! I had no idea about the 14-day rule for the Airbnb portion. Quick question - does the personal use test apply separately to each rental unit, or to the entire rental portion of the property? For example, if I use one of my Airbnb rooms for guests during the holidays but never use the long-term rental rooms personally, does that affect just the one Airbnb room or my entire rental operation? Also, regarding the home office deduction - can I claim this even if I'm already deducting 80% of my home expenses for the rental activity? It seems like there might be some overlap there that I need to be careful about.

Great questions! The personal use test applies separately to each rental unit/space. So if you use one Airbnb room for personal guests during holidays, it only affects that specific room's tax treatment, not your entire rental operation or the long-term rental rooms. You'd need to track the personal use days for each space individually. For the home office deduction, you're right to be cautious about overlap. You can claim both, but you need to be careful with the allocation. If you're already allocating 80% of your home to rental use, your home office would need to come from the remaining 20% personal use portion. So if your home office is 100 sq ft and your total home is 2000 sq ft, that's 5% of the home. Since this comes from your personal use area, you'd actually be at 75% rental use + 5% home office + 20% personal use = 100%. The key is making sure your percentages add up correctly and that the home office space is used exclusively for business purposes. Keep detailed records of which space is used for what!

Great point about the separate bank accounts! I wish I had set that up from the beginning - it would have saved me hours during tax prep trying to sort through mixed transactions. Regarding the QBI deduction, I ran into this same question last year. From what I learned, the key factor is whether your rental activity rises to the level of a "trade or business" under Section 162. For short-term rentals, if you're providing substantial services like daily cleaning, concierge services, or meals, it's more likely to qualify as a business activity eligible for QBI. However, even long-term rentals can sometimes qualify if you're actively involved in management activities rather than just collecting rent. Things like regular property maintenance, tenant screening, advertising vacant units, and handling repairs yourself can push it into business territory. I'd recommend documenting all the services and activities you perform for your rentals. The IRS looks at factors like time spent, types of services provided, and how regularly you perform these activities. A tax professional familiar with rental properties can help determine if your specific situation qualifies for the QBI deduction.

This is incredibly helpful advice! I'm just starting to deal with a mixed rental situation myself and wish I'd seen this earlier. Quick question about the material participation test - does the 100 hour threshold apply to each individual Airbnb unit separately, or to all short-term rental activities combined? I have two rooms that I rotate as short-term rentals depending on demand, so I'm wondering if I need to track hours separately for each room or if I can combine the time spent managing both units together. Also, your point about the room allocation chart is spot on. I've been winging it with rough estimates and I can already see that's going to cause problems. Do you have any recommendations for what specific details to include in that chart beyond square footage and use type?