Short-Term Rentals (avg stay ≤7 days) are NOT rental activities under §469 — material participation alone unlocks non-passive losses.
Reg §1.469-1T(e)(3)(ii)(A) excludes short-term rentals (average customer use ≤7 days, or ≤30 days with substantial services) from the definition of 'rental activity.' Result: losses are non-passive and offset W-2/business income WITHOUT needing Real Estate Professional Status (750 hrs + >50% time). Instead, satisfy one of the 7 material participation tests (100 hrs is common — 'greatest participant' also works). Combine with cost segregation + 60% bonus 2024 for MASSIVE first-year loss.
Click Generate advisory deep dive for mechanics, IRC citations, a step-by-step execution plan, a worked numeric example on your profile, costs, risks, and this-week actions.
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.
Keep personal use under 14 days OR 10% of rental days to preserve STR loss deductibility; over triggers vacation-home rules.
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.