What is the Substantial services test?

The substantial services test is an IRS framework that determines whether a short-term rental operation provides services significant enough to be treated as a hospitality business rather than a passive rental activity. Substantial services include daily housekeeping, meal service, concierge support, and transportation, elevating the rental beyond bare accommodations. Hosts providing substantial services report income as self-employment, while hosts providing basic services report on the passive rental rules and may take Depreciation and amortization along with the Augusta rule exclusion.

Related Terms

What is a Short-term rental?

What is Material participation?

What is the Fair market rental value?

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