STRDeduct

Material participation test checker

There are seven tests in Reg. §1.469-5T and you need to pass only one. For most short-term rental owners it comes down to the third: more than 100 hours, and more than any other single person who worked on the property. Enter the hours and all seven are evaluated below.

Counting only work on the rental itself. Time spent researching purchases, being on call, and travelling never counts.

Everyone else who worked on it, logged one person at a time

Per person — never added together. The test races you against the single busiest one.

At least one test passes

Leading test: number 3

  • 1. 500-hourno
  • 2. substantially-allno
  • 3. 100-hour-and-mostpasses
  • 4. significant-participation-aggregateno
  • 5. 5-of-prior-10-yearsno
  • 6. personal-service-3-yearsno
  • 7. facts-and-circumstancesno

The 100-hour test races your 134 hours against cleaner at 96 — the busiest single other person, not the 3 of them combined. You need more than 100 hours and more than that person.

Common questions

What is the 100-hour test?
You participate more than 100 hours during the year, and no other single individual participates more than you do. It is a race against one person at a time — usually the cleaner — not against everyone added together.
Do I add up all the other workers' hours?
No. The test compares you against each individual separately, so the one who matters is whoever worked the most. Pohoski won on the property where he could show he beat the manager and lost on the one where he could not.
Which of my hours do not count?
Investor-capacity work such as reviewing financials, time spent on call rather than working, and travel time. Hours before the property was placed in service do not count either.
Does my spouse's time count as mine?
Yes. A spouse's participation counts toward your total whether or not they file jointly with you, under section 469(h)(5).
Is passing one test enough?
Passing any one of the seven establishes material participation for that activity and year. Which one you pass by matters, though — a pass on the significant participation route alone can be pulled back into the net investment income tax.

Passing is not the same as proving

Every hours case lost in recent years was lost on evidence, not on arithmetic. What the court looks for is a record kept as the work happened, with start and stop times and a concrete description — and the other workers’ hours logged too, because that is the number the third test turns on. See how the numbers are computed, or model the full year with the estimator.