Tracking Software For Material Participation (Taxes)

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Tracking Software For Material Participation (Taxes)

Tom E.
Member since 2023 · 24 posts · 13 votes

Hi Forum,

I'm about to close on my first STR and plan on materially participating >100 hours this year as I'll be working on the property and plan to rent it the last 1-2 months of the year. I've read the qualifying criteria multiple times and have already notified my CPA who has done it multiple times for their clients previously.

My question is what have people used with success to best track their time/investments over the year? I have a W2 job and look forward to the losses this year to offset some of my income (Not my 'WHY' for running an STR, but a nice bonus). I've looked at Quickbooks, Stressa, Harvest...etc. Hard to really know what would work best and what people have used. Look forward to hearing input!

T

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Krishnan Iyer
Investor · Member since 2023 · 46 posts · 34 votes
1y

Hey Tom, I use Stessa to manage all my income and expenses (bookkeeping) for all my properties. I log my work for Material Participation in a simple spreadsheet - Date, Property, Activity, Time, Description, Vehicle Used, Mileage, Person (my wife or myself), Expenses. The Expenses is not important here but for me, it's convenient because it is part of the travel and work we did in the property. This is a very important log but only to be used if asked (i.e. if audited). 

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  • Krishnan Iyer
    Investor · Member since 2023 · 46 posts · 34 votes
    1y

    Hey Tom, I use Stessa to manage all my income and expenses (bookkeeping) for all my properties. I log my work for Material Participation in a simple spreadsheet - Date, Property, Activity, Time, Description, Vehicle Used, Mileage, Person (my wife or myself), Expenses. The Expenses is not important here but for me, it's convenient because it is part of the travel and work we did in the property. This is a very important log but only to be used if asked (i.e. if audited). 

    4Reply
  • John UnderwoodPro Member
    Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
    1y
    Quote from @Tom E.:

    Hi Forum,

    I'm about to close on my first STR and plan on materially participating >100 hours this year as I'll be working on the property and plan to rent it the last 1-2 months of the year. I've read the qualifying criteria multiple times and have already notified my CPA who has done it multiple times for their clients previously.

    My question is what have people used with success to best track their time/investments over the year? I have a W2 job and look forward to the losses this year to offset some of my income (Not my 'WHY' for running an STR, but a nice bonus). I've looked at Quickbooks, Stressa, Harvest...etc. Hard to really know what would work best and what people have used. Look forward to hearing input!

    T


     First person I've heard say I look forward to the losses.

    0Reply
  • Aaron ZimmermanBusiness Member
    Accountant · Chicago, IL · Member since 2018 · 2k+ posts · 1k+ votes
    1y

    I would second the simple spreadsheet. No need to over complicate it . If you want to take pictures of some of the work you did, you could save that in a Google drive as well. 

    [email protected]
    Brick House CPAs53 Reviews
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    1Reply
  • Tom E.
    OP
    Member since 2023 · 24 posts · 13 votes
    1y
    Quote from @John Underwood:
    Quote from @Tom E.:

    Hi Forum,

    I'm about to close on my first STR and plan on materially participating >100 hours this year as I'll be working on the property and plan to rent it the last 1-2 months of the year. I've read the qualifying criteria multiple times and have already notified my CPA who has done it multiple times for their clients previously.

    My question is what have people used with success to best track their time/investments over the year? I have a W2 job and look forward to the losses this year to offset some of my income (Not my 'WHY' for running an STR, but a nice bonus). I've looked at Quickbooks, Stressa, Harvest...etc. Hard to really know what would work best and what people have used. Look forward to hearing input!

    T


     First person I've heard say I look forward to the losses.


     Only in the first year as I'll be renting it late in q4 of the year so would be foolish to expect otherwise. 

    0Reply
  • Tom E.
    OP
    Member since 2023 · 24 posts · 13 votes
    1y
    Quote from @Krishnan Iyer:

    Hey Tom, I use Stessa to manage all my income and expenses (bookkeeping) for all my properties. I log my work for Material Participation in a simple spreadsheet - Date, Property, Activity, Time, Description, Vehicle Used, Mileage, Person (my wife or myself), Expenses. The Expenses is not important here but for me, it's convenient because it is part of the travel and work we did in the property. This is a very important log but only to be used if asked (i.e. if audited). 


    Thank you! Great to know. 
    0Reply
  • Tom E.
    OP
    Member since 2023 · 24 posts · 13 votes
    1y
    Quote from @Tom E.:
    Quote from @John Underwood:
    Quote from @Tom E.:

    Hi Forum,

    I'm about to close on my first STR and plan on materially participating >100 hours this year as I'll be working on the property and plan to rent it the last 1-2 months of the year. I've read the qualifying criteria multiple times and have already notified my CPA who has done it multiple times for their clients previously.

    My question is what have people used with success to best track their time/investments over the year? I have a W2 job and look forward to the losses this year to offset some of my income (Not my 'WHY' for running an STR, but a nice bonus). I've looked at Quickbooks, Stressa, Harvest...etc. Hard to really know what would work best and what people have used. Look forward to hearing input!

    T


     First person I've heard say I look forward to the losses.


     Only in the first year as I'll be renting it late in q4 of the year so would be foolish to expect otherwise. 


    Also just re-read what I posted. Haha, yeah I wasn't that clear. Not looking forward to losses, just meant in the sense that I have a new STR and will expect to incur losses in year 1 and this is advantageous from a tax perspective in a sense. Although, obviously being positive would be the eventual goal.
    1Reply
  • Andrew SteffensBusiness Member
    Tampa, FL · Member since 2022 · 3k+ posts · 3k+ votes
    1y

    I have a handful of clients who all keep a simple log.  One specifically I know had an app but ended up going back to a spreadsheet.

    [email protected]813-563-0877
    Vacation Rentals of Florida53 Reviews
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    0Reply
  • Jake BakerBusiness Member
    Flipper/Rehabber · San Diego, CA · Member since 2020 · 1k+ posts · 694 votes
    1y

    @Tom E.

    I agree with the others that a simple spreadsheet is excellent. For material participation tracking, your spreadsheet should include:

    Date & Time Spent – Log the exact dates and hours you worked on the property. Be detailed—track start and end times to clearly show your involvement.

    Task Descriptions – Be specific about what you did. Instead of just writing "property maintenance," note activities like "installed new light fixtures" or "deep cleaned kitchen for guest turnover." This helps prove your direct participation.

    Proof or Documentation – Keep receipts, invoices, emails, or even before-and-after photos as evidence of your work. If you’re messaging guests or contractors, save those communications in a folder.

    MileIQ is great for tracking Mileage. Clockify or Toggl are great for tracking time in an app. 

    [email protected]
    BookkeepingRE LLC (Bookkeeping for Investors, Flippers, Hosts, Agents, Wholesalers & more)58 Reviews
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    2Reply
  • Garrett BrownPro Member
    Rental Property Investor · Houston, TX · Member since 2024 · 502 posts · 548 votes
    1y

    Another vote for a simple spreadsheet. A great tip someone gave me recently was to put everything that you do in your calendar as well. This will give you two documented forms from now on. I'm not a big "put everything in my calendar" guy, but if you are, the calendar way should be easy to add on. I still only do spreadsheets weekly, though. 

    [email protected]
    BiggerPockets
    1Reply
  • Alex Brown
    Rental Property Investor · Santa Monica, CA · Member since 2025 · 6 posts · 5 votes
    1y

    I recommend logging your hours with an app called REPSLog and exporting it at the end of the year.
    Personally I found it easier than using a spreadsheet. It's also an easy way to keep all supporting documents in one place.

    1Reply
  • Tyler Davidson
    Developer · Bethel, ME · Member since 2019 · 13 posts · 3 votes
    5mo

    For time tracking, I’d keep it simple with something like Toggl or even a Google Sheet if you’ll stay consistent.

    Main thing is logging date, time, and what you did so it holds up if needed.

    A lot of tools out there are either too complex or not really built for how hosts operate day to day, which is something I kept running into.

    That’s actually why I built a system for my own rentals to keep everything organized in one place. Happy to share if it helps.

    0Reply
  • Jason MalabuteBusiness Member
    Accountant · Los Angeles, CA · Member since 2016 · 2k+ posts · 895 votes
    2mo

    Honestly a simple spreadsheet is all most people need here, and it beats paying for yet another software subscription. What actually matters is logging things as you go, so each entry should capture the date, how much time you spent, and a specific description of what you did, like "coordinated the turnover clean and messaged the handyman about the water heater" instead of a vague "worked on the property." Back it up with whatever proof you naturally create along the way, such as photos of the work, receipts, and text or email threads with guests and contractors, and keep it all in one folder so it's there if the IRS ever asks. If you'd rather track from your phone, apps like Toggl, Clockify, or REPSLog do the same thing, but a clean spreadsheet you'll actually keep up with beats a fancy tool you abandon by March. The main thing is consistency and enough detail that the hours tell a believable story. How the participation rules apply can hinge on your specific facts though, so it's worth confirming your approach with your own CPA.

    Malabute & Company CPAs525 Reviews
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    0Reply
  • Nick Offerman
    Member since 2021 · 4 posts · 0 votes
    1mo

    I stumbled across this site called strauditshield.com. I’ve been testing out a trial subscription and it’s pretty slick especially the exporting feature and logging third party hours to know that you’re ahead of anyone else if trying to meet the 100 hour test. To me it seems way easier than trying to remember to get out a spreadsheet. 

    0Reply
  • Raul Alcazar
    Member since 2026 · 4 posts · 0 votes
    1mo

    Adding to the spreadsheet consensus here because everyone's right, it's still the simplest thing that holds up. One tweak that's made a real difference for me though. Instead of a blank log you have to remember to sit down and fill in, tie it to your reservation calendar, since that already has timestamps built in.

    Every turnover, every guest message, every contractor visit you had is already attached to a specific date because of a booking on your calendar. So instead of trying to reconstruct "what did I actually do on March 14th," you're just adding a couple of sentences to a date that already has evidence behind it, the checkout time, the guest thread, the cleaner's invoice. That's the part that usually kills people's logs by month three, the blank page is too easy to put off, but annotating something that already exists takes two minutes.

    Also strongly agree with Jake and Garrett on keeping photos, receipts, and messages in the same folder as the log itself. A log by itself is your word. A log next to the guest thread and the invoice for the same day is a lot harder to argue with if it ever gets a second look.

    0Reply
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