STR 05: For the 100 Hour Material Participation Test, Does an Individual Mean a Person or a Company?
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- Опубліковано 5 вер 2024
- In this episode, Brandon and Thomas discuss the definition of "individual" for the purposes of qualifying for one of the material participation tests.
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Question: How do you prove this 100 hour of Material Participation? Do you send a log with the hours? And in case you have a cleaning company, how does the cleaning company show this information? In case of a property manager company, as they are a company, we don't need to worry about their hours, you just need to make sure you have reached 100 hour of Material Participation, right?
Great info!! … QQ: 100hrs each property or overall on the managing of all your properties? I have 2, so want to get that clarification… thank you for all your information!!!
also curious about this!
@@danbaran849 I saw another video of them and they replied it was per property… it is crazy! IRS really doesn’t want to help small real state investors- they want to get the big fishes affecting the small ones … smmmhh
can we take advantage of the STR loophole if we use a property manager ?
It's theoretically possible but challenging and risky in reality.
Great content! Can you clarify “activity”? For example if I spent 100 hours doing prop mgmt (listing mgmt, guest interactions, bookings, fixing things, furnishing, etc) but hire a cleaner that exceeds 100 hrs, does this still meet the criteria? In other words, 100 hours activity here defined as combined or per specific activity? TIA!
No one individual person can do more work than you on the property. So, for example if you hire Mark to clean your properties and he has more hours spent working on the property than you, then you would not qualify for material participation. However, if you hire a cleaning company and they send a new person to clean every time, then yes you will be able to meet the material participation test.
ok, but how does this work? Do you know to ask the the cleaning company to not send the same person for more than 100hours? Do you know to track time of the cleaning company? Does the cleaning company need to send reports to you? or does the cleaning company send reports to the IRS? @@TheRealEstateCPA
So if I own the property with my wife, we can combined my do 100 hours ?
Yes!