I’ve been hearing from a lot of investors lately about how renovation costs keep sneaking up — whether it’s materials, labor, or even permit delays.

If you do the work yourself, you can charge for your time at a fair market rate, but be ready to document hours and materials in case questions come up.

Nice try though.Myth 4: I'm hands-on, so I materially participate"Material participation" is defined by the IRS, not by your Facebook friends and not by YouTube gurus.

Materially participate in your rental activities How do we materially participate in our rental activities?

My local banks either want too much down or want me to have a material list of absolutely everything the property needs.

.), you're often limited to $25,000 of passive losses per year—and that phases out completely if your modified adjusted gross income (MAGI) exceeds $150,000.Real Estate Professional Status (REPS) or the STR Loophole: To use rental losses to offset W-2 or other active income, you must either:Qualify as a Real Estate Professional (750+ hours, primarily in real estate) and materially participate in the property.Or, if it's a short-term rental (average stay under 7 days), materially participate (100+ hours and more than anyone else) to convert it from passive to non-passive—even without REPS.Standard deduction vs. itemizing: You mentioned your CPA said deductions didn’t help due to the standard deduction.

If I analyze, study, purchase, renovate all the properties for myself (not other investor), it is considered "materially participated correct?

If your average stay is ≤7 days and you meet the material participation test, you can still treat it as an active business.

Relatively new to real estate, and I've been lurking the BiggerPockets forums and learning material for quite some time now.

@Lawrence Cargnoni, To your questions:Option 2 (Missouri LLC owned by a Wyoming holding company):You might avoid registering the Missouri LLC in California if you’re not materially managing it from within the state.