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Business income or rental income??

Forum|Forum|4 years ago
February 13, 2022
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I am sole proprietor of a mobile home park business which operates on land inherited by my sisters and I. I rent lots to folks that own their own homes...I do not rent homes, just the land. Is this considered business income or rental income? I maintain the Park's wells and water distribution to these lots, the landscaping of the 10 acres where these 27 lots are located, the septic system, electrical...all things to allow them to utilize the lot. The more I read, the more confused I get. I have no employee's, take a monthly draw and started out as business income but not sure if that is correct. Please someone clarify my income status.

Not A Product Question

Best answer by ColeenD3

The difference between business income and rental income is whether or not services are provided. Simple maintenance of the property is not providing services.

An example of a business would be running a motel where you would provide laundry services. Another might be a BnB where you provide meals.

ColeenD3Answer

The difference between business income and rental income is whether or not services are provided. Simple maintenance of the property is not providing services.

An example of a business would be running a motel where you would provide laundry services. Another might be a BnB where you provide meals.

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TriciaNMAuthor

so the wells, pumps, septic, electrical, and maintenance of these quite costly things are deductions/expenses for offsetting the "rental" income? OMG...that means it has been done wrong for over 30 years...my parents and then my sister before me. Back to the drawing board...changes in QuickBooks maybe/maybe not, but definitely need to redo what I have done in Turbo Tax.

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ZoltanB45

Nothing should be changed in quickbooks. All the activity should always be recorded together. [edited 02-14-22) If you are performing substantial services that are primarily for your tenants' convenience then you can report those expenses on Schedule C instead of Schedule E. For example, professional fees such as accounting should go on the schedule c. I would not lose sleep over it. When you enter the rental income, add the expenses you alluded to earlier in the rental section as well.