Current for 2026 Tax Year · Treas. Reg. § 1.469-5T(a)(1)

Material Participation & 7-Day Rule Hours Modeler.

Compare entered owner hours with modeled Test 1 (500 hours) and Test 3 (100 hours plus plurality) conditions; tax eligibility requires CPA review.

1. Annual hours logged by role

Owner / Spouse active hoursGuest messaging, bookkeeping, supply runs, maintenance

Primary cleaner / turnover labor hoursTotal cleaning hours across all turnovers

Handyman & maintenance technician hoursRepairs, HVAC, plumbing, lawn care contractors

Co-host or property manager hoursThird-party co-host operational hours (0 if self-managing)

W-2 or active business taxable incomeContext-only amount; it does not determine this hours comparison

2. Modeled hour-condition comparison

This model compares entered owner hours with the displayed 500-hour condition; eligible participation hours require CPA review.

This model compares entered owner hours with a greater-than-100-hour and plurality condition; eligibility requires CPA review.

Owner: 135h

Top Contractor: 95h

Participation Recordkeeping Review:

Contemporaneous records may support a participation analysis. Review dates, durations, property details, task descriptions, evidentiary sufficiency, and applicable requirements with your CPA.

IRC § 469 Concepts for Professional Review

Rental-activity and passive-loss treatment depends on IRC § 469, taxpayer facts, exceptions, grouping, and applicable limitations. Review any loss treatment with your CPA.

Treasury Regulation § 1.469-1T(e)(3)(ii)(A) includes an average-customer-use condition involving 7 days or less. Classification depends on the complete facts and professional review.

Material-participation and activity-classification analyses can affect loss treatment. This model does not establish participation or determine whether any loss offsets other income.

Participation Activities and Records to Review

A participation review may examine the nature, timing, and substantiation of recorded activities:

Activities to discuss: Guest communication, cleaner management, acquiring consumables, physical turnovers, routine repairs, staging photography, pricing adjustments, and bookkeeping review. Eligibility depends on facts and applicable rules.
Activities requiring closer review: General research, property browsing, financial-statement review, and travel may receive different treatment depending on purpose, conduct, and evidence.

Related Resources:

Source-linked bookkeeping records

Prepare source-linked records for your CPA.

Roxby retains source-linked records and versioned Close Receipts for accountant review.