Does the STR "Loophole" work for Cost-Seg, if not self-managed?

[Michael Buska]

Hey Everyone,

NJ investor here, looking to buy my first STR in the Orlando/ Winter Park Area in the next few months. Curious if anyone has had success (or failure) qualifying for RE Professional status with an STR, even if not self managing? (My assumption is it may be tough to prove enough material participation if using someone local to manage.)

Two things worth noting:

1- I'll be discussing with my CPA in-depth soon, but would like to hear other's experiences on this.

2 - The main reasons I'm looking to STR's is the tax benefits (Cost-Seg) & appreciation that comes with buying in these areas opposed to the mid-west where I look for long-term rentals.. Not saying I would abandon this if I can't qualify for the material participation, but it is a factor.

Any input is much appreciated!

[Michael Plaks]

@Michael Buska

STR tax benefits are not related to the REP status. You do not need REPS to get tax benefits from STRs, and qualifying for REPS does not help you with STRs. Two completely separate things.

Read this: https://www.biggerpockets.com/forums/51/topics/1122635-the-s...