Your first short-term rental tax return will ask you for five numbers, and four of them cannot be reconstructed accurately in April. They are your own hours of work, the hours everyone else put in, the number of stays and nights each property had, the days you or your family used it personally, and the expenses tied to specific tasks. Start recording all five in your first week and the return is an afternoon of sorting rather than a scramble through a year of messages.
The five numbers your first return will ask for
The reason a new host needs a record at all comes from IRC §469, which treats rental losses as passive by default. Treas. Reg. §1.469-1T(e)(3)(ii)(A) carves out an activity whose average period of customer use is seven days or less — the "short-term rental" exception — and an activity in that exception is tested like any other trade or business rather than as a rental. That is why hours matter: the material participation tests in Treas. Reg. §1.469-5T and IRS Publication 925 are what decide whether the activity is passive or not, and they are measured in hours.
None of this is a position you should take on your own reading, and none of it is settled by a good log. What a log does is give your preparer real figures to work with. If you want to see roughly where your numbers land before that conversation, you can check where your numbers stand with the free checker.
Number 1: your hours, starting today
The tests that matter most to a new host are the 500-hour test, the 100-hour test (more than 100 hours and more than any other single individual), and the "substantially all" test. Whichever one eventually applies, the unit of proof is the same: a dated entry naming a property, a specific task and the actual minutes it took.
Record it the day it happens. Temp. Reg. §1.469-5T(f)(4) says participation may be established by any reasonable means and does not require contemporaneous daily reports, but the Tax Court has repeatedly given more weight to records made at the time than to summaries built afterward. A calendar reconstructed in March from memory is the weakest version of this record, and it is the version most first-year hosts end up with.
Log the ordinary work: turnovers and inspections, guest messages and booking changes, restocking, repairs, coordinating a cleaner or handyman, pricing and calendar updates, permits and lodging tax filings. The short-term rental tax hours guide walks through the categories in detail.
Number 2: everyone else's hours
This is the number new hosts almost never capture, and it is the one that decides the 100-hour test. That test asks whether your participation exceeded 100 hours and exceeded the participation of any other individual, including people you pay. A cleaner turning a property forty times a year, a co-host answering messages, a property manager, a handyman — each of them accumulates hours against you in that comparison.
So ask for time, not just invoices. A cleaner's invoice that says "40 turnovers, $X" tells you nothing about hours; an invoice or a short monthly note that says "40 turnovers, about 3 hours each" tells you what you actually need. Set that expectation in the first month, when it is a normal onboarding question rather than a strange request in December.
Keep those hours in the same record as your own, attributed to the person who did the work. Reconstructing a cleaner's year from bank statements is guesswork, and it is guesswork about the exact figure the comparison turns on.
Number 3: stays and nights, per property
The seven-day average is computed per activity and per year: total rental days divided by the number of stays. A single thirty-night booking in a year of weekend stays can move that average across the line, which is why the figure is worth watching during the year rather than discovering after it.
Booking platforms report the underlying stays, so this is a matter of checking the number periodically and writing down what you saw and when. Keep it per property. If you own more than one, the grouping of activities is a question for your preparer, and separate per-property figures let them group; a single blended number cannot be taken apart later.
Number 4: personal-use days
If you or your family stay at the property, IRC §280A and IRS Publication 527 describe how personal use affects what you can deduct — broadly, use beyond the greater of 14 days or 10% of the days rented at fair value can cause the property to be treated as a residence and limit the loss. Days you spend substantially full time on repairs and maintenance are generally treated differently from days you spend there on vacation.
Record the dates, who stayed, and what the days were for. A weekend where you replaced a water heater and a weekend where you used the place yourself look identical on a calendar in April unless you wrote down which was which at the time.
Number 5: receipts tied to tasks
Expenses matter for the deduction, but for a first-year host the receipts do second duty as evidence. A hardware store receipt timestamped the same afternoon as a logged repair entry corroborates that entry in a way the entry alone does not.
Keep them attached to the work rather than in a shoebox: the date, the vendor, what it was for, and which property. Also keep the documents that fix your timeline — the closing statement, the listing date, the permit, the insurance binder, the first booking. Those establish when the property was ready and available, which a preparer needs for depreciation and for the start of the operating year.
Month one setup, in about twenty minutes
- Decide where the log lives today, before the first guest checks in. A free log template is enough to start.
- Enter your existing setup hours from memory now, while it is weeks rather than months, and label them as pre-opening so they can be separated later.
- Message your cleaner and anyone else you pay: ask for hours on every invoice from here on.
- Put a recurring 10-minute entry in your calendar on the last day of each month to catch anything missed and to check the stay average on the platform.
- Start a folder for the closing statement, permit, insurance and listing screenshot.
If you would rather not build it yourself, STR Tracker keeps the same record with timestamps applied as you enter each task, and it is free for 14 days with no card if you want to try it through your first turnovers.
What to ask a CPA in your first meeting
Bring the five numbers and ask questions rather than for confirmation. Does my activity fall under the seven-day exception for this year, and what is my average period of customer use. Which material participation test is realistic for me. Do my pre-opening hours count, and how do you want them labeled. Should my properties be grouped or kept separate. Is a cost segregation study worth it for this property in this year. What personal use have I had, and does it limit anything.
A preparer can answer all of that quickly from a tidy record. From a year of Airbnb messages and a bank statement, the same meeting becomes a reconstruction project, and the answers get more cautious the thinner the evidence is.