Keep services minimal (linens + basic clean between stays) to stay on Schedule E — avoid SE tax while keeping STR loophole.
For STRs providing ONLY 'de minimis' services (linens, basic cleaning between stays, WiFi, utilities), stay on Schedule E — no SE tax on profits. STR loophole (avg stay ≤7 days + material participation) still applies to make losses non-passive. Best of both worlds: profitable years pay no SE tax, loss years fully offset W-2. Avoid services that trigger Schedule C: daily housekeeping, meals, guided tours, transportation, on-site concierge. Codify services in operating agreement + platform listing.
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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.
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.