If your short-term rental was listed, ready and never booked, you are in a genuinely unsettled corner of the passive-loss rules, and the hours you logged are still worth having. The short-term rental exception in Treas. Reg. §1.469-1T(e)(3) turns on the average period of customer use, and that figure is computed by dividing days of customer use by periods of customer use — a division a year with no stays cannot perform. What such a year becomes on a return is a question for your preparer. What you can control is whether the year is documented well enough that they can answer it.
Available for rent is not the same as rented
Two different questions get collapsed here, and separating them helps.
The first is whether the property was in service. A rental is generally treated as placed in service when it is ready and available for its intended use, and from that point the ordinary operating costs of holding it out for rent are deductible whether or not a guest ever arrives. An empty month does not suspend a business.
The second question is the one IRC §469 asks: what kind of activity was this for the year, and did you materially participate in it. That sorting happens on the facts of the taxable year, and in a year with no customer use some of the facts the regulation looks for are simply absent. IRS Publication 925 describes the passive activity rules in general terms; it does not work through a property that was open all year and took nothing.
What the average-stay computation has to divide
The reason short-term rentals attract hour-counting at all is the exception in Treas. Reg. §1.469-1T(e)(3)(ii)(A): where the average period of customer use is seven days or less, the activity is generally not treated as a rental activity, and it is tested like any other trade or business — which is where the material participation tests come in.
The computation sits in §1.469-1T(e)(3)(iii), and it is a division: aggregate days of customer use over the number of periods of customer use. Our guide to the average stay test works through the mechanics on a normal year.
The common assumption about a vacant year is that zero days of use gives an average of zero, which is comfortably under seven. That is not what the regulation describes. With no periods of customer use there is no denominator, and a division without a denominator does not produce a figure of zero — it produces no figure. Whether an activity with no computable average falls inside the exception, outside it, or is addressed some other way is not something the regulation's text settles, and practitioners differ on it.
Why a zero-booking year is a question, not an answer
There is a second wrinkle, one layer up. The regulation's definition of a rental activity has two parts: tangible property held in connection with the activity is used by customers or held for use by customers, and the gross income from the activity represents amounts paid principally for the use of that property. A year with no bookings satisfies the "held for use" language comfortably and produces no such gross income at all.
Reasonable readings pull in different directions from there, and some preparers will also ask a prior question — whether a trade or business was yet being carried on in that year, which has its own body of rules about activities that have not begun. We are not going to pretend this resolves cleanly, because it does not. It turns on facts, on the rest of your return, and on a judgment call that belongs to a CPA or EA who can see all of it.
What is safe to say is narrower, and more useful: the year is a question, the question gets asked when the return is prepared, and the quality of your answer depends on records you can only make now.
Hours during a vacant year are still hours
Nothing in Treas. Reg. §1.469-5T conditions the material participation tests on revenue. The tests measure involvement in the operations of an activity — hours of work done in connection with it — and an owner who spent the year pricing, maintaining, marketing and fielding inquiries that went nowhere was working.
That matters in two directions:
- For the year itself, if the activity is tested as a trade or business, the hour thresholds are the ordinary ones. They are not reduced because the property underperformed.
- For later years, §1.469-5T(a)(5) describes material participation based on participating in the activity for any five of the ten preceding taxable years. A year you worked and did not log is a year that cannot help you in 2031.
So the answer to "should I keep logging if nobody is booking" is yes, and the reason is not optimism. It is that the record is the only thing that survives the year.
Held for rent: the evidence that matters
In a year with no reservations, your booking platform's reservation report proves nothing, because it is empty. The evidence shifts to availability and effort. Worth having, dated:
- The listing itself — live dates, the calendar as it stood, screenshots at a few points in the year
- Price changes and the reasoning, however brief
- Inquiries, including the ones that did not convert, and your replies
- Advertising beyond the platform: local listings, direct-booking site, social posts
- The permit, licence, lodging tax registration and insurance in force for the year
- Utilities, cleaning and maintenance contracts kept running
- Your hours log, with activity descriptions that read like operating a business rather than minding an asset
That last line is the one that does the work. An investor-style record — checking statements, watching the market — reads differently from an operator's record, and the distinction matters under the regulations.
What changes if the property was off the market
A different set of facts produces a different year, so be honest with yourself about which year you had.
If the listing was paused for a stretch, if the property was under renovation, if it was occupied by you or by family, or if it was being readied rather than offered, those are not the same as open and unbooked. Personal use in particular pulls in rules of its own and can change what §469 is looking at. A property that changed character mid-year is closer to the situation in converting your home to an STR, where the dates do most of the work.
Pin the dates down while you remember them: when the listing went live, when it was paused and why, when any personal or family stay began and ended.
What to keep for a year with no guests
The practical shape of it is a normal log plus a short written record of availability.
Keep logging contemporaneously, by date, with a real description and the property named. At year end, pull the year as a single document and file it with the listing screenshots and the permit paperwork. In STR Tracker that is a custom date-range export, which puts the whole year in one PDF or workbook to hand your preparer alongside the rest. If you are not using an app, the free log template has the columns that matter.
Then add one page your log cannot capture: a plain note of what the property was doing each month — listed, paused, renovated, occupied — and what you did about the absence of bookings. It takes twenty minutes and it is the page that makes the rest of the file legible to someone reading it years later.
Ask your CPA or EA how they want a zero-booking year presented before you file. It is the kind of question that is easy to answer with a tidy file and nearly impossible to answer from memory.