Material participation hours for STR Tax Loophole

[Arda Bircan]

This post is for the STR investors who are looking to take advantage of the STR tax loophole which allows you to write off paper losses against your active income. There is some confusion about material participation hours.

First off, you need to keep track of your time. You can start counting your hours once the property is under contract. (Not before) The time spent before the property is under contract such as analyzing deals, doing negotiations, research, education hours, traveling, etc do NOT count towards the material participation hours.