STR "Loophole" feasibility

[Lloyd Hussey]

Are there any good general guidelines for evaluating the relative attractiveness of an STR for the so-called Loophole strategy to shelter W2 income? Not sure if it's something that can be generalized, but curious to hear thoughts.

Also, is there a deadline by which it has to be put in service to be used for the 2025 return?  

[Krishnan Iyer]

Lloyd .. Look for "Material Participation" - there are tons of resources and details on the internet. The STR path is very attractive when it's done right. For example: At the end of the year average stays should be 7 days or less for it to be an STR (IRS), host it yourself - do not use a property manager initially, materially participate in the STR (look up the 100 hr. and 500 hr. rule) - this total hour number is for you + spouse, document ALL details on the work you are doing in the STR, do a cost seg on your property, use the cost seg to file for bonus depreciation - any STR property put into service in 2025 (after Jan 20) is eligible for 100% bonus depreciation (HUGE PLUS!). There is no deadline, but you do want to get in sooner and not wait till late Dec to do this. Hit me up if you need any help.

PS: Material Participation is the way to get help with your STR losses vs. W2 income.

Krishnan