All Forum Posts by: Justin Unck

Quote from @Ashish Acharya:

@Justin Unck Time spent at the property before it’s listed for rent—including furnishing, repairs, and setup—does not count as personal days, because the IRS doesn’t consider the property “in service” until it’s available for rent. These pre-rental days are excluded from the rental vs. personal day calculation. Once the property is listed, days spent on repairs or maintenance (with 4+ hours of work) are not personal days, but days used for capital improvements typically are counted as personal use unless the property is concurrently rented. To stay compliant, document when the property became available for rent and track your time and activities clearly.

This post does not create a CPA-Client relationship. The information contained in this post is not to be relied upon. Readers should seek professional advice.

Thank you for the information. When I read Pub 527, there was a section titled Dwelling Unit Used as Home. After I read that section, my impression was that unless we used the property as Main Home prior to renting as an STR, we would be subject to personal days if at the property and not doing maintenance and repairs. Am I reading this wrong or is there language in another location that overrides that?

Justin

Thanks for the replies so far.  In a discussion on a different website, someone had said this:

"The tax code has in the 280A regulations that if you arrive the night before, and then spend the next day working, that the night before will not count against you."

I searched the internet for 280A regulations, but i couldn't find anything.  Does anyone know something about this?  That would be incredibly helpful as I'm personally leaning toward a strict interpretation of the IRS rules by using a midnight to midnight convention as a rental day, which means I have to put in 4+ hours on Friday evening to avoid a personal day.

I posted a follow up in that discussion; we'll see if they can provide more details.

Justin

Good morning, I have another question in relation to Personal Days and the definition of a Home with regards to a short-term rental. Once we take possession of the property, but prior it to being “for rent”, we will be at the property for maintenance, repairs, furnish it, and generally make it ready to list for rent.

Are there any different rules for determining personal days prior to it being listed “for rent”? The reason I ask is that furnishing the property and generally setting it up for rent doesn’t appear to meet the exception for “Days used for repairs and maintenance”. How do we approach time spent at the rental in advance of renting and not accumulate Personal Days? This also seems to be an issue during active rental periods if we are doing improvements or construction.

I appreciate any insight. Thx.

Good morning, I’m trying to understand a little more about how the IRS views “days” when applied to rental days and personal days.

Does the IRS consider a customer overnight stay as 1 or 2 rental days?

What I’m really getting at is an IRS “rental day” from midnight to midnight, or from the afternoon on one day to the morning of the next day? And do Personal Days follow the same convention?

This is important for us when it comes to calculating Personal Days (and average rental duration). Our frequent scenario will be to arrive at the property to do monthly maintenance on Friday evening and depart on Sunday morning. If a “day” is midnight to midnight, it’s unlikely we will be able to meet the “Days used for repairs and maintenance” criteria on Friday, therefore causing a Personal Day. Same issue on our departure day as we may leave in the morning and not have time to do much work.  The bulk of work would be done through the day on Saturday.

Our primary purpose to be at the property is do monthly maintenance and repairs, and I understand 4+ hours is the requirement to meet the “Days used for repairs and maintenance” criteria. I’m not sure how to prevent the accumulation of Personal Days with a midnight to midnight definition of day.  Any information would be helpful.  Thank you.

What is a day of personal use?

A day of personal use of a dwelling unit is any day that the unit is used by any of the following persons.

Days used for repairs and maintenance.

Any day that you spend working substantially full time repairing and maintaining (not improving) your property isn’t counted as a day of personal use. Don’t count such a day as a day of personal use even if family members use the property for recreational purposes on the same day.

Hi Scott, thank you, while we are located in Sacramento, the property in question is in Mendocino on the coast.

Thanks Stephen.  I will avoid STR/LTR in same year by ending the Long term rental within 2025.  I assume if the tentant is out, no contract exists, and I am not trying to rent as an LTR, then I should be Ok going into 2026 and setting up an STR and getting the tax benefits of running it as short term rental.  Is there an angle I am overlooking?

Justin

I browsed around the website a little and don't see a CPA listing.  Where would I look for this?

Good morning,

My wife and I are looking to buy a STR and I've done some research and reading, but there is always so much left to learn. Good books so far have been Short-Term Rental Tax Secrets and Every Airbnb Host's Tax Guide (still working on this one). I posted a question in the STR forum looking for confirmation and/or guidance on our plan. If someone is able to answer it or even just address a portion, that would be helpful (I realized it's quite long after I posted it). I tend to bounce around the web a lot looking for information, but this forum seems to stand out above others for quality information, and any help is appreciated. Thx.

Justin in Sacramento

Hi everyone, my wife and I are shopping for a STR property. The plan is to manage it ourselves, and enjoy the property while we are there doing work on it (for material participation). I'm working a W2 job for a few more years before retirement. The long-term plans for the property are a bit hazy, but we don't have kids and are not going into it with a plan to eventually sell, so long term tax implications are not so important. I've been educating myself for a few months and think I have a reasonable plan, but I am hoping to get some feedback. The regular contributors on this board seem very knowledgeable and willing to help; any commentary is much appreciated.

We've identified a house (3/2 SFR) with what appears to be a very stable tenant who would remain if given the option. Given the stability, distance to property (4 hours), and our first time at this, we plan to:

-Keep the tenant in as a LTR until the year’s end, removing the property from market no later than 12/31/25. Benefits: easier on us, and guaranteed income. Question: I believe I can opt out of bonus depreciation in 2025? Am I correct in thinking that I am required to file an IRS election to opt out of bonus depreciation in 2025?

-Sometime early in 2026, convert the property to a STR, with my wife and I materially participating for management. We will avoid any personal use days. For 2026 tax year, I would perform a cost segregation study and do bonus depreciation to allow rental loss deduction against my W2 income. Benefits: huge tax break if the 100% bonus depreciation is back, and get into the STR in front of the summer high rental season. Question: I understand that the depreciation durations are different for LTR (considered residential, 27.5) and STR (commercial, 39). What difficulties will this create moving from a LTR depreciation to a STR depreciation? Making the tax situation more complex isn't appealing.

-Is there anything else we should be considering, or maybe a different way to approach this? We could let the tenant go to put it on the market as an STR in 2025, but it would be a lot of work. I know we would miss high STR rental season, but I believe we could meet the material participation requirements. If the bonus depreciation isn't reauthorized for 100% in 2025, but it is for 2026, I would opt out of bonus deprecation until 2026 (unless I can't?).

General questions:

-While the property is an LTR in 2025, I will have losses, I believe termed PALs. I understand that these losses will continue carrying forward. We don’t plan to sell the property and I’m not foreseeing any other passive income. What other ways could I make use of these PALs?

-In late 2025, if the property is vacant (after LTR use ends, but before starting 2026 year), can my wife and I use the property without diminishing tax breaks, or causing other issues?

-In early 2026 while prepping the vacant property as an STR rental, what is the correct way to use the property without diminishing our 2026 STR tax benefits? If we stay at the property and do substantial work each day (I believe that is the term), does that prevent any personal use or vacation use in IRS eyes? This has been an area that I've struggled to understand about what is ok and not ok, and I really want to prevent personal use due to the significant tax implications in 2026.

I’ve never used a CPA, but will once we get started. Right now, I just need to know if our overall plan is sound. Any takers? Appreciated in advance.

Justin

(property is location in Mendocino County)