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Rental of Storage Units subject to Self-Employment Tax?
QUESTION:I need some advice - the owner and builder of 130 storage
units has hired a manager of the storage units. The IRS
publications say renting storage garages include services,
so they are subject to self-emplyment tax. On the other
hand, the IRS says that real estate rentals are not subject
to SE tax. Do any practitioners have clients in this
situation, and are they paying self employment taxes on the
profits?
ANSWER: - I have two clients who rent storage units. They report
their income and expense as rental property on Schedule E,
and do not pay self-employment tax. Both of the facilities
are strictly self-storage; neither facility has a manager
-Storage units are NOT real estate, therefore yes, subject to
se tax on the profits. The manager is an employee, and his
taxes are another matter of course.
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