You loaned someone your trailer. Or your chainsaw. Maybe your camera. They paid you for it. You called it a favor.
But the IRS? They call it a business.
Any time you rent out personal property, not real estate, but gear, tools, equipment, or anything that isn’t land or a building, you’ve officially stepped into taxable territory.
Even if it was just that one time.
That money you made counts as income, and depending on how often you rent that item out, the IRS might say you’re not just doing someone a favor. You’re running a business.
The IRS Has Rules and They’re Watching
You can’t just take the money and run. That income has to be reported.
Here’s the kicker. You only get to deduct related expenses if the rental activity looks like a business. That means renting often, trying to make a profit, and treating it like more than just a hobby.
Otherwise, no write-offs. Just tax.
How They Decide You’re Running a Business
The IRS looks at the whole picture. They ask:
- How often are you renting the item?
- Are you advertising or keeping records?
- Are you clearly trying to make money?
- Does this look like a hobby or an actual hustle?
So, if you rent your camera out every weekend and take Venmo payments? That’s a business. If you lend your mower once for beer money? That’s not the same.
What Happens If It Is a Business?
When it qualifies as a business, a few things kick in:
- You pay income tax
- You might owe self-employment tax
- You could qualify for deductions like maintenance, insurance, depreciation or supplies
But if you guess wrong or don’t report it at all? You could overpay. Or worse, underreport and get flagged.
Either way, it’s not fun. One drains your wallet. The other might come with a letter you don’t want to open.
Not Sure Where You Stand?
That’s what we’re here for.
We’ll help you figure out what needs to be reported, what you can actually deduct, and whether your rental side gig qualifies as a business or is just a one-time thing the IRS isn’t too worried about.
Set up a time to talk. You’ll leave with answers, not homework.
