STR Tax Benefits
I am being hounded by Ads on social media about using STRs to substantially reduce W2 income. ChatGPT tells me that this strategy is oversold and is also high risk since it requires 100 Hours of material participation that needs to be meticulously documented. Anyone been able to successfully pull this strategy off or are trying to? Love to hear your thoughts.
Most Popular Reply
#3 1031 Exchanges Contributor
- Investor
- Las Vegas, NV
The Tax smart real estate podcast has MANY episodes on qualifying for the STR loophole and REP status.
Don’t forget. You aren’t creating deductions you’re simply pulling them forward. They will be taxed as regular income not depreciation recapture if you sell without doing a 1031, you’ll probably have to start with a local property and no property manager to get to 100 hours. (Driving to and from don’t count.)
Listen to a few episodes and see if it's worth it to you. IMHO it is not worth losing money so you can save a percent of the lost money in taxes. So if you wouldn't do a STR without the loophole it's probably a bad use of your time and effort.