# of Rental Days to Qualify for STR.
After watching podcast 689 (Pay No Taxes in 2022), I am motivated to see if I can purchase a STR prior to the end of 2022. Is this feasible? Is there a minimum number of days that the STR would need to be available or rented prior to January 1? Would I (or my spouse need to put in 100 hours before the end of the year in order to qualify for the bonus appreciation "loophole"? Thanks so much.
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@Jon Abbott - I am not a CPA/accountant, so I will answer from what I have learnt from my research.
If purchasing STR for offsetting your active W-2 income, you need the following things to happen
- Property needs to be "in service" (for example - listed on VRBO/ABNB/Boking.com etc)
- If you are using cost segregation for bonus depreciation, it can be done anytime before April of '23 prior to filing taxes
- You need to show "material participation" - There are 7 specific tests you need to pass only one out of those seven. For a very superficial understanding, check this link. But know that there are many nuances to this and IRS website is the best resource. https://www.investopedia.com/t...
- Would you need to put in 100 hours prior to the end of the year, or a prorated number of hours could qualify? That is a question for a competent CPA/accountant/EA. May be some professional can chime in.
- If your goal is to not offset active W2 income for 2022 and just to show paper loss to offset the income generated from your STR or to offset W2 income from 2023, then I would suggest doing the cost seg study next year when you are fully in service and can also prove material participation. Granted that you would only be able to take 80% bonus depreciation next year, it is still better than nothing.
In my limited experience, I have learned that the right question for your tax expert is not "Can this be done?". It is "How can this be done?"
Hope this helps!