Are you logging your REPS/STR hours now or rebuilding them in January?

Question

Every tax season someone hands me an hours log that was obviously typed up the week before. Same wording on every line, nice round numbers, 'property management - 4 hrs' thirty times in a row. If the IRS ever asks, that log isn't going to help you much.

We've got about two months left in the year, so now's the time to clean it up. I keep mine as I go, usually just a quick note on my phone with the date, the property and what I actually did. 'Interviewed two cleaners' holds up a lot better than 'admin.' I also hang onto the texts and emails that back it up. And if your spouse is helping, track their time separately, because their hours can count for material participation.

How are you tracking your hours this year? App, spreadsheet, calendar, or future-you's problem in January?

Hossein Sharifi · Answer

Good reminder. One thing STR owners miss: the 100-hour test only works if you also put in more hours than anyone else, and that includes the cleaner. If the cleaner spends 2 hours on each turnover and you had 60 turnovers, that's 120 hours, so you need more than that. I'd ask the cleaner and any co-host for their hours now, while the calendar is still fresh, not in April.

Roel Vicerra · Answer

Matthew, for material participation, yes. Your wife's hours add to yours no matter whose name is on the deed, so together you count toward the 500-hour or 100-hour tests. REPS is different. One of you has to hit 750 hours and more than half your working time alone, no combining. Since this is your full-time job now, you might be the one who qualifies. In the spreadsheet, I'd add columns for who did the work and which property it was for.

Matthew Dowg · Answer

Are you saying mine (main person who does repairs) AND wife can count to hours??

I’ve been dealing with this exact problem, I thought I’d try to see how much effort we were putting in. Now is currently my full-time job with a new property.

Spreadsheets are what I’ve been using. (I was mostly keeping track of expenses via credit card dump, but I am now trying to be more professional).

From your perspective, is the bigger problem that clients don’t record their hours consistently, or that the records they provide lack sufficient detail?

Eric Kleinsasser · Answer

Matthew, Jason's point was that a spouse's hours can count toward material participation. How that plays out for REPS is a question for your CPA, so I'd ask them before year end. On the tracking side, what I'd do is log the same day, one line per job: date, property, who did it, what was done, hours, and what it cost. If you bought materials for that job, put the receipt on the same line instead of in a separate card statement. Then your hours log and your expense list back each other up instead of being two separate projects in January.

Are you logging your REPS/STR hours now or rebuilding them in January?

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