Hosting property on F1 visa

[Akash130]

Hi 

If someone owns a property and put it on airbnb will it be called passive income? I know he should not do the cleaning part to make it passive. But isn't it strange that he cannot do cleaning in his own house. What are the rules in this case?

@Airbnb 

[Haiqi1]

Based on your definition, nothing is passive income, you are partly involved in any types of passive income

[Brian2036]

@Akash130 

You should check the Immigration website to be sure but I believe that you are free to rent property you own.

Managing rental property for someone else would NOT be OK.

Rental properties are defined as passive income with a couple of exceptions. If you’re a real estate professional, any rental income you’re making counts as active income. If you’re “self-renting,” meaning that you own a space and are renting it out to a corporation or partnership where you conduct business, that does not constitute passive income unless that lease had been signed before 1988, in which case you’ve been exempted into having that income defined as passive.

If someone were paying you to clean their property, that would be active income.

Cleaning your own property does not generate income and I don’t think it would be considered “material participation” by the IRS.

Most people don’t want the income classified as passive because of tax laws. I doubt that the IRS would challenge anyone who claims that their rental income is passive.

The IRS is quite good about answering these questions and if you want to make sure you can check their website.

[Helen3]

It will say do on your visa - but if it's a student one I don't believe you are able to run a business - which running short term rentals are @Akash130 

[Michelle53]

@Akash130  If you want to put a property on Airbnb you will be required to provide a tax number (social security, federal ID or ITIN) or be subject to backup income tax withholding. 

In 2022, anyone earning $600 or more will have their income reported to the IRS, and you may be required to file a tax return.   Whether it is active or passive income is irrelevant. 

You would be best off getting proper advice from an accountant or immigration attorney. 

[Can1540]

Airbnb has in the past published a brochure about how to report income tax. HRBlock also has one guide. There, you will find a flow chart to determine if this is a passive income or not. You can earn passive income from renting out your house for sure. As long as you are not substantially involved, you are fine.

Airbnb will submit your earnings to IRS regardless of the rental period or total amount. It is up to you to determine how much tax you owe to IRS.