Playbook

How high earners can offset ordinary income, how a short-term rental fits, and who it works for.

• What counts as material participation for a short-term rental, and how many hours do you need?Most STR owners meet material participation by logging 100+ hours and more than anyone else, or 500+ hours. Here is how the tests work and what to track.
• How can a short-term rental offset W2 income?A short-term rental can offset W2 income when depreciation losses are treated as non-passive, which usually requires a 7-day average stay and material participation.
• What is the STR loophole (7-day average stay) and who qualifies?The STR loophole treats a short-term rental as non-passive when the average guest stay is 7 days or less, so you only need material participation to deduct losses against W2 income.