Question 1

What does MATERIAL PARTICIPATION mean in short-term rentals?

Accepted Answer

Material participation in a short-term rental business means spending a combined minimum of 500 hours per year working on the business, which is approximately 5 hours per week per person.

Question 2

What does BONUS DEPRECIATION mean in short-term rentals?

Accepted Answer

Bonus depreciation allows investors to deduct a significant portion of an asset's cost in the first year of ownership, reducing taxable income.

Question 3

What does COST SEGREGATION STUDY mean in short-term rentals?

Accepted Answer

A cost segregation study is a tax strategy that identifies and reclassifies real property assets into different shorter-lived categories for depreciation purposes.

Question 4

What does COST SEGREGATION mean in short-term rentals?

Accepted Answer

Cost segregation involves breaking down a building into its component parts (e.g., land improvements, appliances) and reclassifying them with shorter depreciation lives (e.g., 5, 7, 15 years) instead of the standard 27.5 or 39 years.

Question 5

What does DEPRECIATION mean in short-term rentals?

Accepted Answer

Depreciation is the concept of deducting the cost of an asset over time rather than all at once. For residential rental property, the IRS allows a straight-line deduction over 27.5 years.

Question 6

What does 1031 EXCHANGE mean in short-term rentals?

Accepted Answer

A 1031 exchange allows an investor to defer capital gains taxes on the sale of an investment property by reinvesting the proceeds into a new, similar property.

Question 7

What does STEP-UP IN BASIS mean in short-term rentals?

Accepted Answer

Step-up in basis is an IRS provision where an inherited asset's cost basis is adjusted to its fair market value at the time of the owner's death, potentially eliminating capital gains tax for heirs.

Question 8

What does STR TAX LOOPHOLE mean in short-term rentals?

Accepted Answer

A tax advantage allowing hosts to save on active income, potentially offering greater tax benefits than those typically available for passive income investments.

Question 9

What does LLC mean in short-term rentals?

Accepted Answer

An LLC (Limited Liability Company) provides asset protection and allows for a separate business bank account, often disregarded for tax purposes as a single-member entity but can elect S-corp or C-corp taxation.

Question 10

What does SERVICE ANIMAL mean in short-term rentals?

Accepted Answer

Service animals are individually trained to perform tasks or do work for a person with disabilities, as defined by the ADA. They are not considered pets.

Regulations & Compliance

Guides

Hotel Lobbyists Want STRs Gone. City Budgets Disagree.

What are hosts watching?

100% Bonus Depreciation Is Back Permanently (And Most High-Income Professionals Still Don't Know It)

How Short-Term Rentals Can Slash Your Tax Bill by $82K in Year One

How To Take Advantage

Webinaire Lodgify : Plus de protection pour la haute saison (normes, sécurité, piscine, équipements)

The IRS Rewards Those Who Do This…

REPS vs. the STR Tax Loophole: The $25,000 Mistake We Made (And How to Avoid It)

How much is your CPA costing you?

Airbnb Hosts: How to (legally) avoid taxes FOREVER

What do these STR terms mean?

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Cost Segregation Study

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