RENT Magazine Q4'23

IT'S ABOUT ALIGNING WITH GUIDELINES AND ENSURING YOU'RE FULLY LEVERAGING THE TAX BENEFITS.

Material participation is an IRS term indicating the level of involvement an owner has in their property. For STRs, material participation is crucial. The owner must be actively involved, making day-to-day decisions, managing the property, and overseeing its operations. 1. MATERIAL PARTICIPATION To successfully reap the benefits of STRs, it's crucial to understand and meet certain qualifications. This isn't about merely listing a property for short stays; it's about aligning with guidelines and ensuring you're fully leveraging the tax benefits available. QUALIFICATIONS FOR SHORT-TERM RENTALS: YOUR CHECKLIST FOR SUCCESS

2. THE 100-HOUR RULE

As previously mentioned, one of the primary attractions of STRs over other real estate investments is the significantly reduced time requirement. Ensure you spend at least 100 hours annually on the property. It's not just about being an owner on paper; it's about hands-on management.

3. NO PERSONAL USE EXCEEDING 14 DAYS

Your property qualifies as an STR when personal use doesn't exceed the greater of 14 days or 10% of the total days it's rented out at fair market value. Personal use can include using the property yourself, letting family or friends stay without fair rent, or renting it below the market rate.

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