What Time Counts for STR Material Participation

By Jason Watson, CPA
Posted Sunday, May 25, 2025

We exhaustively discussed what time counts for participation in an earlier section as well. Investor and research times do not count. Travel time might count depending on your facts (the window is small). Acquisition time might count if you complete the purchase (convert investor hours to acquisition hours).

Obvious activities that count include repairs and maintenance, scheduling or managing contractors, showing the rental property to prospective guests, managing your advertising and rental platforms, collecting rent, and shopping for supplies.

IRS Publication 925 Passive Activity and At-Risk Rules states the following-

Work not usually performed by owners. You don’t treat the work you do in connection with an activity as participation in the activity if both of the following are true.

1. The work isn’t work that’s customarily done by the owner of that type of activity.

2. One of your main reasons for doing the work is to avoid the disallowance of any loss or credit from the activity under the passive activity rules.

Participation as an investor. You don’t treat the work you do in your capacity as an investor in an activity as participation unless you’re directly involved in the day-to-day management or operations of the activity. Work you do as an investor includes:

1. Studying and reviewing financial statements or reports on operations of the activity,

2. Preparing or compiling summaries or analyses of the finances or operations of the activity for your own use, and

3. Monitoring the finances or operations of the activity in a non-managerial capacity.

Therefore, talking to your wonderful short-term rental experts and real estate CPAs at WCG CPAs & Advisors about tax returns might not count. However, if we chat about contracts, problems with renters, reviewing tenant agreements, then yes!

Sidebar: Short-term rentals with average guest stays of 7 days or less cannot contribute to the 750 hours test for real estate professional status (REPS) since they are not deemed rental activities. Wait, what? It’s true! Temporary Treasury Regulations 1.469-1T(e)(3) reads “an activity involving the use of tangible property is not a rental activity for a taxable year if for such taxable year the average period of customer use for such property is seven days or less.”