The Short Term Rental Loophole
Use short-term rental losses to offset your high-income W-2 or active business income.
Simply put, if your property meets the definition of a "short-term rental" (STR), the IRS doesn't treat it as a passive rental activity automatically. If you materially participate, the dreaded passive loss limitations disappear. You drop a massive depreciation bomb—from a cost segregation study—straight onto your W-2 or business income, slashing your tax bill.
The Formula for the STR Loophole
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Average stay of 7 days or less (or 30 days or less with substantial services).
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Material Participation (usually logging 100+ hours AND doing more work than anyone else, or 500+ hours).
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Cost Segregation + Bonus Depreciation (accelerating paper write-offs to create a massive tax loss).
How We Guarantee Execution
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Average Stay Analysis: 7.01 is a failure. We check your actual bookings (total days rented divided by total rental parties) to ensure you meet the strict 7-day-or-less test before year-end.
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STR Time Log Review: A vague or inflated Excel sheet will fail an audit. We guide you on exactly what counts (cleaning, managing listings, DIY repairs, guest comms) and what doesn't (investor research, education, paying routine bills).
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Spousal Participation: If you're married, spousal hours count together. We plan how you jointly hit the 100-hour mark.
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Grouping Elections: Evaluating whether grouping multiple STRs into one economic unit makes sense to combine your hours across properties.
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Personal Use Limitations (IRC § 280A): Avoid accidentally disallowing your losses by spending more than 14 days (or 10% of rented days) staying at the property yourself.