Keep personal use under 14 days OR 10% of rental days to preserve STR loss deductibility; over triggers vacation-home rules.
IRC §280A(d) classifies a dwelling as a 'residence' if personal use exceeds the GREATER of 14 days OR 10% of days rented at fair rental. As a residence, losses are limited to income. STAY UNDER the threshold to preserve full loss deductibility (subject to STR loophole material participation). Tracking: (1) personal use days include family use unless paid FMV, (2) days maintaining the property don't count as personal use if primary purpose is maintenance, (3) days rented to relatives at FMV DO count as personal. Plan calendar carefully.
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Short-Term Rentals (avg stay ≤7 days) are NOT rental activities under §469 — material participation alone unlocks non-passive losses.
Cost seg study reclassifies 20–35% of STR building basis to 5/7/15-yr property — 60% bonus (2024) = massive year-1 loss.
The Augusta Rule: rent your primary residence to your own business up to 14 days/yr at market rate — 100% deductible to biz, tax-free to you.
STRs providing hotel-like services (daily cleaning, meals, transport) move to Schedule C — SE tax + QBI eligible.
Airbnb/VRBO often collect + remit TOT for you — exclude from gross rental income; save on state income tax base.
Lease a unit long-term ($2K/mo), furnish, list as STR for $5K/mo — no property purchase required.
Combine §280A(g) 14-day rental + STR cost seg + material participation for cascade of tax benefits on same property.
Exchange appreciated LTR into an STR — defer cap gains, immediately unlock STR loophole + cost seg on new basis.