Buying my first STR today!

Tulsa, Oklahoma
Short-Term & Vacation Rental Discussions
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Buying my first STR today!

Crystal Crow
Investor · Claremore, OK · Member since 2026 · 13 posts · 9 votes

Hey everyone. I posted a few days ago, thank you for all of the replys.

Im so new to this, and working backwards. I saw the house for sale, decided to buy to STR it, and I close today!

I have to paint and repair a few things. And I plan to have my children and I clean between guest stays.

I dont have an LLC. I plan to compensate my children for their time. How do I best document this?

I want to get the highest tax benefits possible, i know I need 100hrs of my own time, but do my children's time count towards my 100??

Also. If theres any real-estate CPAs in my area, I'm still looking for one. (NE of Tulsa)

Thank you for any and all help. P.s. I'm super excited and nervous right now.

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Jules Aton
MD/DC · Member since 2024 · 1k+ posts · 1k+ votes
3d

Congratulations!

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  • Trent Reeve
    Atlanta · Member since 2022 · 706 posts · 634 votes
    3d

    im no CPA, but i do not believe your childrens time counts for you. And i hear that the IRS is really starting to crack down, so make sure you document your hours very well.

    1Reply
    • Crystal Crow
      OP
      Investor · Claremore, OK · Member since 2026 · 13 posts · 9 votes
      3d

      Thank you. Can i just use an excel sheet that has "name. Start time. Stop time. Work done"??

      0Reply
    • Trent Reeve
      Atlanta · Member since 2022 · 706 posts · 634 votes
      3d

      I would search in here and also there are a few good facebook groups for STR's. There have been suggestions for apps and other things for tracking hours, but I cannot remember them right now.

      1Reply
  • Andrew SteffensBusiness Member
    Tampa, FL · Member since 2022 · 3k+ posts · 3k+ votes
    3d

    I would highly recommend @Christopher Tile@Christopher Tile@Christopher Tile

    He is in NY but I am in FL and he is my CPA. Very knowledgeable about taxes and RE/STR specifically. Congrats and good luck!

    [email protected]813-563-0877
    Vacation Rentals of Florida53 Reviews
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    1Reply
  • John UnderwoodPro Member
    Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
    3d

    Congrats!

    You should start interviewing local CPA's.

    Do you have a nearby Real Estate club you could join and get recommendations from?

    1Reply
    • Crystal Crow
      OP
      Investor · Claremore, OK · Member since 2026 · 13 posts · 9 votes
      3d

      Oh. Im not sure. I will ask my realtor. Thank you

      0Reply
  • Christopher Tile
    Accountant · Long Island, NY · Member since 2021 · 184 posts · 146 votes
    3d

    Thanks @Andrew Steffens for plugging me in.

    @Crystal Crow A few quick answers for you:

    • To pay your kids, the correct way to do it is run payroll. Definitely worth the research/talking through with a CPA.

    • Your kid's hours do not count towards your material participation

    Also, nerves are a good thing! This isn't easy for anyone, but nothing is ever as bad as it seems. Once you get the first few bookings, you'll be fine!

    1Reply
  • Jules Aton
    MD/DC · Member since 2024 · 1k+ posts · 1k+ votes
    3d

    Congratulations!

    2Reply
  • Michael K GallagherBusiness Member
    Real Estate Agent · Columbus OH · Member since 2018 · 1k+ posts · 1k+ votes
    3d

    @Crystal Crow welcome to the forums and I love that you just jumped in and are figuring it out, bit congrats! that's something I'm working to get a bit more of in my life.

    [email protected]614-362-2231
    1Reply
    • Crystal Crow
      OP
      Investor · Claremore, OK · Member since 2026 · 13 posts · 9 votes
      3d

      Welp. I hope it works out for me. I tend to fret. But while i fret, i work bit by bit towards my goal. Sometimes i laze, sometimes i scramble. Its not the most organized. 😅

      0Reply
  • Diana Khan
    Attorney · 10451 Mill Run Cir #755 Owings Mills, MD 21117 · Member since 2024 · 329 posts · 123 votes
    3d
    Quote from @Crystal Crow:

    Hey everyone. I posted a few days ago, thank you for all of the replys.

    Im so new to this, and working backwards. I saw the house for sale, decided to buy to STR it, and I close today!

    I have to paint and repair a few things. And I plan to have my children and I clean between guest stays.

    I dont have an LLC. I plan to compensate my children for their time. How do I best document this?

    I want to get the highest tax benefits possible, i know I need 100hrs of my own time, but do my children's time count towards my 100??

    Also. If theres any real-estate CPAs in my area, I'm still looking for one. (NE of Tulsa)

    Thank you for any and all help. P.s. I'm super excited and nervous right now.

    @Crystal Crow, congratulations on closing! I've worked with new investors who felt like they had to set up an LLC right away because they thought it was part of getting the tax benefits. I would not rush that piece just because you are starting an STR.

    The tax side and the ownership side are really two different conversations. I'd talk with the CPA about the hours and paying your kids, and separately look at how you want to own the property, your insurance, and the local STR rules. If you decide later that an LLC makes sense, I'd have the title, loan, and insurance reviewed before changing anything.

    I’d be glad to stay connected, @Crystal Crow. You’re asking the right questions early, which is much easier than trying to fix the setup after everything is already running.

    1Reply
    • Jane Ukamaka
      Virtual Assistant · Member since 2026 · 2 posts · 0 votes
      3d

      Congratulations Crystal

      0Reply
  • Matthew Tregoning
    Real Estate Consultant · Melbourne, FL · Member since 2019 · 205 posts · 113 votes
    3d

    Congrats Crystal! Once the repairs are done, spend a night there before opening the calendar. Cook, shower, sleep in a guest bed. You'll catch little stuff that's easy to miss when you're just in and out working.

    2Reply
    • Crystal Crow
      OP
      Investor · Claremore, OK · Member since 2026 · 13 posts · 9 votes
      3d

      Oh. Such a good idea. Thank you

      0Reply
  • Min JangPro Member
    Accountant · Member since 2026 · 5 posts · 2 votes
    3d

    Congrats on the closing. Before focusing on the 100 hours, I'd confirm which material participation test you expect to meet and whether any projected STR loss would actually be usable on your 2026 return. Paying your children and tracking your own participation are separate issues, so I'd have both reviewed before setting anything up. We work with rental owners remotely and may be able to help!

    1Reply
    • Crystal Crow
      OP
      Investor · Claremore, OK · Member since 2026 · 13 posts · 9 votes
      3d

      Ok. Thank you. I assumed that children working with me would be the same as spouse working with me (they both fall under the 100hrs). But im glad i asked, because it sounds like i was wrong. Hahaha 😔

      0Reply
  • Aaron ZimmermanBusiness Member
    Accountant · Chicago, IL · Member since 2018 · 2k+ posts · 1k+ votes
    3d

    Children's time would not help you. I can send you a spreadsheet that will help you document material participation for STRs. Feel free to pm. 

    congrats on your purchase! 

    [email protected]
    Brick House CPAs53 Reviews
    WebsiteView Page
    2Reply
    • Crystal Crow
      OP
      Investor · Claremore, OK · Member since 2026 · 13 posts · 9 votes
      3d

      Hey Aaron, i'm using the free BP. I requested a "connect". P.s. this is all new to me and i didnt watch the "how to use BP forum" video. 😅

      0Reply
  • Cristal Smith
    Member since 2022 · 3 posts · 1 vote
    3d

    Congrats!

    1Reply
  • Mike GrudzienPro Member
    Lender · Eugene, OR · Member since 2019 · 2k+ posts · 1k+ votes
    3d

    Wish you much success!

    0Reply
  • Ashish AcharyaBusiness Member
    CPA, CFP®, PFS · FL · Member since 2017 · 5k+ posts · 3k+ votes
    3d

    Crystal, congrats on getting your first STR closed. The biggest thing I'd clarify right away is that 100 hours is not automatically the requirement for every STR, and your children's hours generally do not count toward your own material-participation hours.

    For the common STR strategy, you first look at whether the activity falls outside the normal rental-activity definition, often because the average guest stay is 7 days or less. Then you still need to satisfy one of the material-participation tests for the losses to potentially be nonpassive.

    One commonly used test is 100+ hours and at least as much participation as anyone else. If that’s the test you’re relying on, I’d track not only your own hours, but also the hours of cleaners, contractors, co-hosts, and anyone else working on the property. Your spouse’s participation can generally be combined with yours for these rules, but your children’s time does not simply get added to your total.

    You absolutely can have your children legitimately work in the business and compensate them for real services like cleaning or other age-appropriate work, but I’d document the duties, hours, and reasonable pay separately. That is a compensation issue, not a way to increase your own material-participation hours.

    Since you're closing today, I'd also start documenting your placed-in-service date, furnishing costs, repairs versus improvements, average guest stay, and participation hours from day one. Those records become very important if you later use cost segregation or try to offset other income with STR losses.

    Feel free to DM me, I'd be happy to send over a few resources that might help with STR material participation, cost segregation, and documenting the strategy correctly.

    [email protected]941-914-7779
    INVESTOR FRIENDLY CPA®5241 Reviews
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    0Reply
  • Roel Vicerra
    Real Estate Consultant · Houston, TX · Member since 2026 · 6 posts · 2 votes
    2d

    Answering the hour and documentation pieces.

    Your own hours are what count toward material participation. Kids' hours do not add to yours. Spouse hours do count with yours. On the common 100-hour test, anyone else's participation (kids cleaning, a paid cleaner, a co-host) can count against you if they log more than you. Keep your hours clearly above theirs.

    A simple log works: date, task, start/stop, minutes. Contemporaneous notes beat a reconstruction in April. Paying the kids is a separate payroll/compensation question for whoever signs the return; that is not the same as participation hours.

    Separately, "highest tax benefits" often gets mashed into one slogan. Cost segregation only reclassifies building basis into shorter lives (and bonus where it applies). It does not by itself let losses hit W-2. For an STR, that usually still needs average stay of 7 days or less plus real material participation you can prove.

    I'm not a CPA. A short sit-down with a local real-estate CPA before you file, with your hour log sample and how you plan to pay the kids, is a useful next check.

    0Reply
  • Jason MalabuteBusiness Member
    Accountant · Los Angeles, CA · Member since 2016 · 2k+ posts · 898 votes
    2d

    Congrats on closing. A couple of things worth clearing up early: the 100 hours isn't a universal requirement for every short-term rental, it's just one of the material participation tests, and your kids' hours don't roll into your own total the way a spouse's generally would. The usual path is to first confirm the property falls outside the regular rental category, often because the average guest stay is seven days or less, and then meet one of the participation tests. If you're leaning on the 100-hour test, keep in mind you also have to be the person who did the most, so track what your cleaners, contractors and any co-host put in too. You can absolutely put your kids on payroll for real cleaning work, just treat that as a compensation item with documented duties, hours and reasonable pay rather than a way to add to your own hours. Since you just closed, start a file now with the date the place was ready and available to rent, what you spend on furnishings, which work is a repair versus an improvement, your average guest stay, and your own hours. The exact answer depends on your specific facts, so run it by your own CPA or tax advisor before you lock anything in.

    Malabute & Company CPAs525 Reviews
    WebsiteView Page
    1Reply
    • Crystal Crow
      OP
      Investor · Claremore, OK · Member since 2026 · 13 posts · 9 votes
      21h

      Jason,

      Thank you for this. I downloaded an app that helps me keep track of hours, with a place to write what i did and photos. I have purchased almost all of my furnishings off Facebook marketplace, I have cash app for some records, but i also paid cash for many items. So i'll make a list, but i have almost no records.

      Can i pay my kiddos without making myself an official business (LLC)? thank you for all of your advise.

      0Reply
  • Kate Sanchez
    Member since 2025 · 242 posts · 98 votes
    1d

    @Crystal Crow Congratulations on closing today! That is a huge milestone, and it is completely normal to feel a mix of total excitement and butterflies. Jumping straight into a short-term rental (STR) is a bold, rewarding move.

    1Reply
    • Crystal Crow
      OP
      Investor · Claremore, OK · Member since 2026 · 13 posts · 9 votes
      21h

      Kate,

      Thank you. I work full time and just spent 2 hrs last night, cleaning. I have a long way to go before its ready to the point that I would want to stay in it. So Your words of encouragement mean a lot. 😊

      0Reply
  • Glen Hayhoe
    Rental Property Investor · Lakeland Florida · Member since 2026 · 9 posts · 7 votes
    1d

    Congratulations on the close. And good on you for asking this in September rather than in April.

    I'm not a CPA, so verify all of this with one rather than relying on it. But the direct answer to your question is the opposite of what you're hoping for, and it's much better to hear it now.

    Your children's hours don't count toward your 100. They count against you.

    The rule you're thinking of is one of seven material participation tests. That one requires you to participate more than 100 hours and for your participation to be not less than that of any other individual, and the regulation specifically includes individuals who are not owners. Employees, contractors, cleaners, family. Everyone who works on the property is someone you have to out-hour.

    The comparison is person by person, not against the total. If you log 120 hours and each of your two kids logs 80, you're still fine. If one of them logs 130, you've failed that test. Paying them makes it harder rather than easier, because there's a separate facts-and-circumstances test that fails outright if anyone else is compensated for management services or puts in more management hours than you do.

    Two bigger things nobody has raised yet.

    Placed in service. You close today and you still have painting and repairs ahead of you. The property has to be available for rent, meaning actually listed and ready, before any of this applies for 2026. If it doesn't go live until January, there's no 2026 deduction and the 100-hour question is moot for this year. Ask your CPA specifically whether hours spent on repairs before it's listed count at all, because that affects what you should be logging right now.

    And none of it matters unless there's a loss to use. The reason people chase the short-term rental rules is to put a loss against ordinary income, and that loss usually comes from a cost segregation study accelerating depreciation. On a partial year, in a property that closed in late September, run those numbers before you pay for the study.

    On documenting the kids: whatever your CPA says about payroll treatment, the documentation is the same either way. A written job description, a timesheet with date, task and hours, a wage comparable to what you'd pay an unrelated cleaner, and real money moving by traceable transfer into an account in their name. Cash doesn't survive an audit. Whether the payroll tax exemption for a parent employing a minor reaches a rental reported on Schedule E is exactly the kind of question to put to the CPA, because the answer isn't automatically the same as it is for an ordinary business.

    Start a time log today. Date, task, hours, written down as you go. These cases are usually lost on documentation rather than on the hours themselves, and a log reconstructed in March is worth very little.

    On the CPA search, this niche is national and mostly remote, so screen on specialization rather than distance. Ask how many short-term rental material participation clients they handle, whether they do or coordinate cost segregation, and whether they'll review your time log format before December. Someone twenty minutes away who does this twice a year is worse than someone three states over who does it every week.

    Last thing, and it's the one that could actually cost you the purchase. Confirm with your city or county that nightly rental is permitted at that specific address, and find out what registration and lodging tax you owe. Do that this week. Verify it with the jurisdiction directly rather than trusting anyone on this forum, me included.

    1Reply
    • Crystal Crow
      OP
      Investor · Claremore, OK · Member since 2026 · 13 posts · 9 votes
      21h

      Glen,

      Thank you so much for taking the time to respond. I will have to look into how i log paying my children.

      I thought the 100 hours didn't apply until the rental is available, but i have started logging my time, just the same.

      I bought the house for$170k, so i don't acost seg is worth the cost. 😒

      And luckily, i found out a month ago to all my city/ County if i can use it as an STR, and since I'm outside of the city proper, they don't care what i do with the place. 😅

      I with reread your post a few times, as it has good information for me to knowledge myself about. Thank you

      0Reply
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