Well, let’s find out!

Whether you own a single family home or multi-unit apartment building, correctly classifying and positioning your rental real estate income, taxes, deductions and recordkeeping will help you maximize your rental properties. If you own rental properties, you should know the ins and outs of rental properties and rental income. This means accurate record keeping for your rental properties. The process of bookkeeping includes expenses incurred in rent, repairs, income earned from rental units, expenses to buy back the property and more. Bookkeeping helps you monitor your income so you will be able to know if there is any increase in your business. Without a proper system of bookkeeping, you may have problems with taxation of your rental properties. TSAT can help with all aspects of your rental property record keeping!

If you run a business, you need to make sure that your business is properly managed. You also need to make sure that your business is properly recorded and your business is properly maintained so that tax benefits are maximized. This is vital to any business owner. If you want to maximize your business’s tax benefits, you need to make sure that your rental properties are properly handled and maintained.

So, let’s get down to business. Is your rental property ran as a business or an investment? Determining this distinction is one of the most important decisions when it comes to taxes.

Classification 1: Rental Property as a Business 

Owning a rental property qualifies as a business if; you do it to earn a profit and work at it regularly and continuously.

Furthermore, there is no  specific number of rental properties or rental units you must own for your rental activity to qualify as a business.

There are caveats however; in the past the IRS and courts have ruled the renting of a single unit (or more) does not always constitute as a business. Be sure to work with TSAT to have all the facts and circumstances around your rental property as a business!

Classification 2: Rental Property as an Investment 

Rental ownership is an investment, not a business, if you do it to earn a profit, but don’t work at it regularly and continuously—either by yourself or with the help of a manager, agent, or others.

Furthermore, investments include people who purchase interests in business entities that own real estate, but aren’t actively involved in management of the entities, are also investors for tax purposes. These include the limited partners in limited partnerships that own real estate, and people who own shares in corporations and REITs (real estate investment trusts).

Which is better? 

Overall, it’s to your advantage, tax-wise, to categorize their rental activities as a business, not an investment. Either way, the WORST thing you can do is not plan for the tax implications!  TSAT is here to determine all of your classifications, record keeping, and tax implications of your rental property.

Here at TSAT, we are not simply tax preparers. We work with you to provide a 360-degree strategic financial advice, including small business operations and investment guidance. We will help you stay ahead of the curve when it small business or personal investments!

If you are a gig worker or small business owner looking to grow your business, TSAT’s AMAZING team considers much more than just your taxes!


TSAT’s Services will let you focus on your business’s core competencies! Whether you have a small business or you need help personally, TSAT can give you HOPE! Call us today! 

Phone: (417) 208-2858

“We want to Amaze our Clients not just serve them”. – Tabitha Smith