Own an Airbnb or VRBO? Here are the STR tax rules on one page.
The rules behind the short-term rental strategy, plus an hours log.
STR owners rarely miss the big picture. It's the details: not knowing the average guest stay, rebuilding an hours log from memory in April, or deciding on cost segregation after the fact. Our free one-page checklist puts the rules in order so you can see whether they apply to you.
- The 7-day test: how to figure your average guest stay, and why 7 days or less changes how the rental is treated.
- Material participation: the common hours tests (100+ and more than anyone else, or 500+), and why a manager-run property usually doesn't qualify.
- Personal use: the days you or family stay, and when they start limiting deductions.
- Speeding up depreciation: what a cost segregation study does, and 100% bonus depreciation for qualifying property acquired after January 19, 2025.
From Sargis Ivanov, CPAFounder, Next Level CPA PLLC · a private CPA firm
Four rules and an hours log. One page.
- 01
The 7-day test
- Average stay = rental days divided by number of stays
- 7 days or less, or 30 or less with significant hotel-like services
- If it passes, it isn't treated as a normal passive rental
- 02
Material participation
- 500+ hours, or 100+ hours and more than anyone else
- Cleaners and managers count as "anyone else"
- Your spouse's hours count toward yours
- 03
Personal use
- Track every day you or family use the property
- Over the greater of 14 days or 10% of rental days limits deductions
- 04
Speeding up depreciation
- Cost segregation moves parts to 5, 7 and 15-year lives
- 100% bonus for qualifying property acquired after Jan 19, 2025
- Depreciation starts when it's ready to rent, not at closing
A CPA firm for business owners, not a filing service.
Next Level CPA PLLC is a virtual CPA firm founded by Sargis Ivanov, CPA. We work with business owners in all 50 states on tax planning, tax preparation and outsourced accounting.
We're a private firm, not a government agency. This page isn't a bill or a required filing. We sent you a letter because short-term rental owners keep asking us the same tax questions, and the checklist answers most of them.
- All 50 statesVirtual service, on Google Meet
- 4.9 starsFrom 78 Google reviews
- CPA-ledLicensed in North Carolina
How the STR strategy works. Watch this first.
The two gates (average stay and material participation), where the loss usually comes from, who it fits and who it doesn't, and what our STR Year-One Setup costs.
Read the transcript
Own a short-term rental, or thinking about buying one? There's a tax strategy you've probably heard about. Let's walk through how it actually works.
Normally, rental losses are passive. They can only offset other passive income, not your paycheck.
But short-term rentals can play by different rules. People call it the STR loophole. Really, it's two gates you have to clear.
Gate one: the average guest stay. Divide your rental days by the number of stays. If the average is 7 days or less, or 30 or less with significant hotel-style services, the usual passive rental rule doesn't apply.
Gate two: material participation. That means you actually run it. Common ways to qualify: 100 hours or more, and more than anyone else, including your cleaners. Or 500 hours or more. Your spouse's hours count too.
Clear both gates, and a tax loss from the rental may offset your W-2 or business income.
Where does the loss come from? Often, cost segregation. A study splits the property into shorter-life parts, so depreciation comes faster. And qualifying property acquired and placed in service after January 19, 2025 can take 100% bonus depreciation in year one.
One habit makes it all hold up: keep an hours log as you go. Date, task, time spent.
Who's it for? Short-term rental owners with W-2 or business income, who'll truly run the property themselves. If a manager handles everything, it usually isn't a fit.
Here's what we'll do for you. We check that you qualify, give you hours-log templates, coordinate the cost segregation study, and put the bonus depreciation on your return, with two strategy meetings along the way.
What it costs. The STR Year-One Setup starts at $1,500 per property, one time. Later years start at $500 per property, and an optional Q4 hours check is $250. Your tax return, from $600 if married filing jointly, and the cost seg firm's fee are separate. The final price is confirmed after we look at your situation.
On the free discovery call, we look at your numbers, confirm it fits, and you leave with a clear next step and a price. Book yours at nxtlevelcpa.com.
General education, not tax advice for your situation.
Owners who got it set up and stopped worrying.
4.9 stars from 78 Google reviews.
“My wife started a new small business last year so that gave us even more anxiety filing our taxes this year. He walked us through each and every step and even laid out plans for next year's taxes.”
“He responds almost immediately, which is rare, and consistently provides clear, informative guidance. You can tell he genuinely cares about his clients, not just getting the job done.”
“Working with Sargis & his team has been an incredible, FRICTIONLESS experience. As a busy professional, it has been a joy to trust this team and be guided through a streamlined process.”
Rather talk it through? Book a free discovery call.
Thirty minutes on Google Meet with Sargis. Video is optional. We'll hear about your rental, answer your questions and tell you if we're a fit.
- 01
Tell us about your rental
Your properties, how you run them and the tax questions on your mind.
- 02
We tell you if we're a fit
If the STR strategy doesn't fit your situation, Sargis will say so on the call.
- 03
You leave with a next step
A clear plan, and a price if there's work for us to do.