Hours count toward material participation when they are work you actually did in the operation of the rental — cleaning, repairs, guest communication, restocking, pricing, bookkeeping for that property. Hours generally do not count when they are investor-type work (reviewing statements, studying the market) or when you are travelling to the property, unless you are also the day-to-day manager. The regulations at Treas. Reg. §1.469-5T set the tests; what decides most cases is whether the hours were written down at the time.
Why the definition matters more than the number
The 100-hour test and the 750-hour test are both counts of participation. If half of what you counted turns out to be the wrong kind of hour, the total can drop below the line even though you were genuinely busy. Owners who lose on this point rarely lose because they did too little; they lose because they could not show, hour by hour, that the work was the kind that counts.
So before you tally anything, sort your time into three buckets.
Bucket one: work that counts
The regulations describe participation as any work done by an individual in connection with an activity in which they own an interest. For a short-term rental that includes, in practice:
- Turnovers and cleaning you do yourself, including laundry and restocking.
- Repairs and maintenance — the leaking faucet, the smart lock battery, the deck stain.
- Guest communication: inquiries, check-in instructions, mid-stay problems, reviews.
- Listing management: photos, pricing changes, calendar blocks, platform settings.
- Supply runs specifically for the property (the receipt is your corroboration).
- Bookkeeping and record-keeping for that property, including keeping this log.
- Coordinating and supervising people who work on the property — the cleaner, the handyman — when you are the one directing the work.
The common thread: the work has to be operational. It is the kind of thing a manager would be paid to do.
Bucket two: work that generally does not count
Two categories are called out by the regulations and come up constantly in short-term rentals.
Investor-type activities. Studying financial statements, preparing summaries for your own analysis, monitoring the finances in a non-managerial capacity. These hours count only if you are also directly involved in day-to-day management. Most self-managing STR owners are, but the hours still need to be described as management, not as "reviewing performance."
Work not customarily done by owners. If the work is of a kind an owner would not normally do, and one of your main reasons for doing it is to avoid the passive-loss rules, it is excluded. This is rarely the problem for an owner who genuinely runs the place, but it is the reason padding a log with unusual tasks tends to backfire.
Bucket three: the grey area — travel time
Travel is the hour category owners most want to count and examiners most often strike. The Tax Court has treated travel to and from a property inconsistently: it has allowed it where the taxpayer was clearly the hands-on manager and the trip was for operational work, and disallowed it where the trip looked like a visit to an investment. Many practitioners advise logging travel separately from the work at the destination, so that if the travel hours are challenged the underlying work still stands on its own.
Whatever position you and your adviser take, log it in a way that lets the two be separated later.
The second half of the 100-hour test
The 100-hour test in Treas. Reg. §1.469-5T(a)(3) has two conditions, and the second one is the one owners forget: you must have participated for more than 100 hours and your participation must not have been less than that of any other individual — including people you paid.
That means your cleaner's hours matter. If a cleaning company spends 140 hours a year on turnovers and you spend 110, you have passed the number and failed the test. An estimate of other people's hours belongs in your record. STR Tracker has a field for other participants' hours on each property for this reason; a notebook column labelled "cleaner" works too, as long as it is filled in.
How specific does a log entry need to be?
The regulations say participation can be established by any reasonable means — calendars, appointment books, narrative summaries — and that contemporaneous daily time reports are not required. Courts have then spent two decades explaining what "reasonable" does not include: ballpark estimates made at filing time, round-number reconstructions, and logs that contradict the owner's own emails or bank records.
A useful entry has five parts:
| Part | Example |
|---|---|
| Date | 2026-07-14 |
| Property | Lakeview cabin |
| Activity | Turnover after Smith stay: strip beds, laundry, restock, reset thermostat |
| Duration | 2.5 hours (2:00–4:30 pm) |
| Corroboration | Cleaning-supply receipt; platform message confirming checkout |
The corroboration column is optional, but it is what turns a log into evidence. A dated entry that matches a receipt, a platform message, or a photo is very hard to argue with.
When to write it down
The same day. Not because the regulation demands it, but because the alternative — reconstructing a year in March — is exactly the pattern courts have rejected, and because memory is bad at duration. A two-hour turnover becomes "about three" by the weekend and "three or four" by tax season.
If you are reading this in the middle of the year with nothing written down, reconstruct what you can now from objective sources (platform messages, receipts, calendar, photos with timestamps), mark those entries as reconstructed, and start logging contemporaneously from today. A record that is honest about which part was reconstructed is worth more than one that pretends it was not.
Common mistakes
- Counting hours for the wrong activity. Hours on a long-term rental do not count toward a short-term rental's test unless you have properly grouped the activities. Keep the log per property.
- Forgetting the spouse rule. For the material-participation tests, a spouse's participation is attributed to you, even if you file separately. Log both people's hours and keep them distinguishable.
- Logging in round hundreds. "About 120 hours" is a conclusion, not a record. The log should add up to the number, not start from it.
- No note on who else worked. See the second half of the 100-hour test above.
- Mixing investor time in. "Reviewed August numbers, 3 hours" is the kind of entry that gets struck. "Adjusted nightly rates for September after reviewing August occupancy, 45 minutes" is management.
What to write down this week
Pick the property, open whatever you log in — the app, the free spreadsheet template, a notebook — and enter the last seven days from your platform messages and calendar while they are still fresh. Then keep going. If you want the longer treatment of the tests themselves, the guides on the 100-hour test for short-term rentals and the 750-hour real estate professional test cover the mechanics; this article is about what goes in the log.