Thinking about buying an STR before year-end? Here’s a heads up.

If you’re planning to pick up a property in 2024, remember that you likely won’t qualify for the STR tax benefits on your 2025 return unless the property is placed in service during 2025.

“Placed in service” means it’s ready and available for rent, not just purchased. It doesn’t need to have bookings yet, but it must be fully ready for guests.

You’ll also need at least two paid guest stays to establish your average stay length and meet the 7-day rule. A few important reminders:

Stays cannot be to family at any price. Renting to family is treated as personal use by the IRS.
Stays also cannot be to friends unless you charge true fair market value.
You can use friends as paying guests if it’s an arm’s length transaction at full market rent.

If you want a quick explainer on “placed in service,” here’s a helpful video: https://www.loom.com/share/69f59e1de5184d2782473dfbe7bd72c0

If you’re thinking about buying or want to make sure you’re on track for 2025, our team is here to help.

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