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I rent a room in a commercial bldg, all improvements, etc

Customer Question
I rent a facial room...
I rent a facial room in a commercial bldg, all improvements, etc are at my expense. I then rent that room out to other facialists by the day or hour. How do I report on a 1065, I rent the room with a partner and we formed a partnership
Submitted: 2 years ago.Category: Tax
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Customer reply replied 2 years ago
Do I use form 8825 and other property type select 'SELF-RENTAL' OR 'OTHER'?
Answered in 53 minutes by:
10/3/2015
Tax Professional: PDtax, Certified Public Accountant (CPA) replied 2 years ago
PDtax
PDtax, Certified Public Accountant (CPA)
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Hi from just answer. I'm PDtax, and will assist.

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Tax Professional: PDtax, Certified Public Accountant (CPA) replied 2 years ago

Subleasing your salon space and equipment is not real estate rent in the tax sense. Your rent paid to your landlord is rent. Your income from facialists is commission or equipment rent. Neither of those arrangements are reported on 8825.

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Tax Professional: PDtax, Certified Public Accountant (CPA) replied 2 years ago

If you are paid, say, 20% of the fees earned by others, that's commission income. If you instead rent for $30 per hour, regardless of the fees earned, that is equipment rent, and can be reported as such. Neither goes on 8825.

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Tax Professional: PDtax, Certified Public Accountant (CPA) replied 2 years ago

Please advise if you need anything further. Positive feedback is appreciated. I'm PDtax.

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