Material participation while managing renovations at a remote property

[Chi Zhang]

Hi BP, 

I’m in the process of renovating and setting up my first short term rental. The property is about 3 hours drive from my primary residence and I go there once or twice every week to work with my contractors to coordinate and manage the renovation. For context I don’t just watch them, I’m actually directing them where to do what and helping them to bring supplies over as the location is remote from large department stores like Home Depot. 

Recently I took some days off from my work to stay at the property for an entire week in an attempt to finish up the renovation here and wrap up most of the leftover work. My question is does travel time and sleep time count toward material participation

I’m aiming to qualify for the 500 hours of material participation. I’ve already met that requirement at this point if I include my 6 hour round trip driving to the property from my primary residence every week. Not sure if I can log the entire week of time that I recently spent here managing the renovations or I should only log the time I’m actually up and working, removing the sleep time at night? And does the driving time count as well? There are mixed opinions about this topic online.

Any insight on this would be much appreciated!

[Bruce Woodruff]

Quote from @Chi Zhang:

Quote from @Bruce Woodruff:

No, you generally would not get to count your time as a $$ investment. I was a high-end builder and I could not count my time working on properties, even when adding a room or more. They expect you to 'donate' your time if you are the owner, sorry.

Thank you Bruce. There maybe some misunderstanding, being a short term rental property owner that will be self managing the daily operations, I’ve learned that in this scenario I would need to count at least some of the time spent setting up the property to pass one of the material participation tests.

 That may be so. But don't mess with the IRS with this.