REAL ESTATE DEALERS - If you are a real estate dealer, rent received in the course of your trade or business is included in self-employment income. You are a real estate dealer if you are engaged in the business of selling real estate to customers with the purpose of making a profit from those sales.

HOTELS, APARTMENTS, ETC. - Rents received from the use of or occupancy of hotels, boarding houses, or apartment houses are included in self-employment income IF you provide services to the occupants. Services are considered provided to the occupants if the services are for the convenience of the occupants and are not services normally provided with the rental of rooms or space for occupancy only. Maid service, for example, is a service provided for the convenience of occupants, while heat and light, cleaning of stairways, and the collection of trash are not.

TRAILER PARK OWNERS - Rent received by trailer park owners is rent from real estate activities and is not included in self-employment income unless the services the owners provide are substantial and for the convenience of tenants. Services that are substantial and for the convenience of tenants include supervising and maintaining a recreational hall, operating a laundry facility, and helping tenants buy or sell their trailers. Income received by owners providing substantial services is included in computing self-employment income.

Figure your net earnings from self-employment on Form 1040, Schedule C, Net Profit or Loss From Business. Generally, figure your net rental income, which is not self-employment income, on Form 1040, Schedule E, Supplemental Income and Loss. Do not use Schedule E if the rental income is from a business that is a qualified joint venture conducted by you and your spouse.

Figure your self-employment tax on Form 1040, Schedule SE, Self Employment Tax. Do not use Schedule SE for income that is reported as rental income on Schedule E.

If you earn or receive income during the year that is not subject to withholding, or if you do not have enough income tax withheld, you may have to pay estimated tax.

For more information on Residential Rental Income, refer to Publication 527, Residential Rental Property (Including Rental of Vacation Homes). For more information on estimated tax, refer to Chapter 2 of Publication 505, Tax Withholding and Estimated Tax. Publication 527 and Publication 505 are available for download, or you may request a copy by calling 800-829-3676.

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