New to STRs

[Christopher Zikakis]

I'm sure this has been covered but I'm having difficulty finding a few specific answers as I try to map out a strategy.  My wife and are are W-2 employees.

The goal is to eventually have a vacation home that my family and I can use and also selectively rent out to friends and extended family.  In order to achieve this my thought is to do the following:

1. Purchase a property that needs a bit of work.

2. Year 1 & 2: Utilize the STR exception, rent occasionally averaging 7 days or less, materially participate by handling bookings and renovating/improving the home. Perform a cost seg study. Occupy the home for less than 14 days annually.

3. Year 3:  Begin using the home personally, occasionally rent to friends/family mentioned previously.

Questions:

1. Are there any areas of concern with utilizing the STR exception for only 1-2 years then transitioning property to personal use with the occasional renter?

2. During the period where utilizing the STR exception are the expenses for renovation/improvement netted against the income the home produces (along with mortgage/property taxes/etc), with the net loss considered non-passive?

Said differently, in a very simplified version:

-30k   Cost of improvements (appliances, carpet, flooring, painting, etc)

-15k   Mortgage

-10k   Property Tax

-1k     Property Insurance

+24k Rental Income

-32k Net Loss: Would this be my deduction against W-2 Income?  Understand that there could also be bonus depreciation but putting that aside for now, just want to make sure I'm thinking about this the right way.

If it's not obvious, the goal is to give investing in real estate/rentals a try, and if we don't enjoy doing it, worst case we end up with a vacation home with a lot of improvements completed that we were able to deduct.

Thanks in advance.