Updated September 2026 for the 2026 tax year.

If you are trying to qualify for Real Estate Professional Status (REPS) or use the STR loophole, one of the most common questions is:

What actually counts toward material participation hours?

Under guidance from the Internal Revenue Service in Publication 925, material participation means involvement in the operations of the activity that is regular, continuous and substantial. The detailed rules are in Treasury Regulation §1.469-5T.

The IRS does not publish a checklist. Below are 50 real-world examples of work that generally counts, 10 that generally does not, and the rules that decide the gray areas.

Key facts for 2026

• STR loophole: a rental whose average guest stay is 7 days or less is not a “rental activity” under the passive loss rules. If you materially participate in it (usually more than 100 hours and not less than anyone else, or more than 500 hours), its losses are non-passive and can offset W-2 income without REPS.
• REPS: you must spend more than 750 hours, and more than half of all your working hours, in real property trades or businesses in which you materially participate, and then materially participate in your rentals.
• Spouses: a spouse’s hours count toward material participation, but not toward the 750-hour or more-than-half REPS tests.
• Investor-type work (reviewing statements, monitoring finances as a non-manager) does not count unless you are directly involved in day-to-day management.
• Why it matters more in 2026: the One Big Beautiful Bill Act (July 2025) permanently restored 100% bonus depreciation for property acquired after January 19, 2025, so a cost segregation study can create a large first-year loss. Material participation decides whether you can use that loss this year.

---

50 Activities That Generally Count Toward Material Participation

These activities usually qualify when they are directly tied to operating your rental activity. Log each one with the date, the time spent, the property and who did it.

Travel & On-Site Work

1. Driving to inspect a rental property and perform services
2. Traveling between rental properties to perform operational work
3. Walking the property with an insurance adjuster after damage
4. Meeting contractors onsite
5. Supervising renovations
6. Inspecting property between tenants or guests
7. Driving to collect rent in person

Travel is the most challenged category in audits. Write down where you went and what you did there, not just the drive. Our post on whether travel time counts toward REPS hours goes deeper. If you work on site, the built-in timer records the minutes as they happen, so the entry reflects the real time spent.

Contractor & Repair Oversight

8. Reviewing contractor bids
9. Negotiating scope of work
10. Approving repair invoices when actively managing the work
11. Coordinating multiple vendors during a rehab
12. Hiring or replacing contractors
13. Supervising repairs remotely while directing work
14. Ordering materials for repairs
15. Personally performing repairs

Keep the bid, invoice or photo with the hour it supports. In REPSLog you can attach it straight to the entry with evidence attachments.

Tenant & Leasing Activities

16. Screening tenant applications
17. Running credit or background checks
18. Drafting lease agreements
19. Negotiating lease terms
20. Showing properties to prospective tenants
21. Coordinating move-ins and move-outs
22. Handling tenant disputes
23. Serving legal notices
24. Collecting rent and managing delinquencies
25. Advertising rental properties

Short-Term Rental (STR) Operations

26. Managing guest communication
27. Coordinating cleaners between bookings
28. Handling turnovers
29. Adjusting nightly pricing
30. Managing booking calendars
31. Updating listing details
32. Restocking supplies
33. Handling guest complaints
34. Inspecting property between stays
35. Changing smart lock codes and checking devices between guests

For most STR owners, the test that matters is more than 100 hours and not less than any other individual, including your cleaner and any co-host. That means you need their hours as well as yours. Participants in REPSLog record who performed each activity, and STR loophole tracking keeps a 100 or 500-hour counter for each short-term rental with that breakdown. Booking calendar sync pulls in your Airbnb or Vrbo stays and suggests an entry for each turnover, so the busy weeks do not go unlogged. For the full strategy, see our STR loophole guide. For 50 examples specific to short-term rentals, and how to choose between the 500-hour and 100-hour tests, see what counts toward STR material participation.

Financial & Operational Administration

Financial tasks count only if they are directly tied to managing and operating your rental properties, not when they are personal investment tracking.

36. Recording rental income and expenses
37. Reconciling rental bank accounts
38. Reviewing operating statements and making management decisions
39. Approving capital expenditures
40. Budget planning specific to property operations
41. Coordinating insurance renewals for rental properties
42. Managing vendor payments
43. Preparing operational documentation for your CPA related to rental activities

The regulations name this line directly. Under Treas. Reg. §1.469-5T(f)(2)(ii), work you do “in your capacity as an investor” does not count unless you are directly involved in the day-to-day management or operations. That includes studying financial statements, preparing summaries or analyses for your own use, and monitoring finances in a non-managerial capacity. If the financial task leads to a management decision you make, it generally supports material participation. If it is personal wealth tracking, it does not.

Legal & Compliance Activities

44. Meeting with an attorney regarding a tenant issue
45. Preparing eviction paperwork
46. Filing eviction actions
47. Responding to HOA violations
48. Renewing required rental licenses or STR permits
49. Handling compliance inspections
50. Reviewing updated rental regulations that affect your properties

If you sort your log by these same groups, a reviewer can see at a glance what kind of work filled your hours. REPSLog lets you set up custom activity categories for exactly that.

---

10 Activities That Generally Do NOT Count Toward Material Participation

These activities are typically considered investment-level or educational rather than operational.

1. Casual drive-bys without performing services
2. Forming an LLC (entity structuring)
3. Reading real estate news
4. Listening to podcasts
5. Attending seminars not tied to current operations
6. Casual Zillow browsing
7. Monitoring property values without taking action
8. Researching deals you never pursue
9. Reviewing personal net worth statements
10. Commuting to an unrelated W-2 job

---

REPS vs STR: Hour Requirements

Material participation determines whether an activity is passive or non-passive. There are 7 material participation tests, and you only need to meet one per activity.

For STR investors, the property first has to be outside the “rental activity” definition. That happens when the average guest stay is 7 days or less (or 30 days or less with significant personal services). Then the commonly used tests are:

• More than 100 hours and not less than any other individual
• More than 500 hours
• Substantially all of the participation in the activity

Our post on choosing between the 100-hour and 500-hour test walks through which one fits your setup.

For REPS investors:

• You must perform more than 750 hours in real property trades or businesses in which you materially participate
• Those hours must be more than half of your total working time for the year, so you also need a record of your other work (see how to log your W-2 hours for the more-than-half test)
• You must still materially participate in the rental activities, property by property unless you make the grouping election

Material participation is activity-based. REPS adds an individual qualification layer on top. In REPSLog you pick the 750, 500 or 100-hour test as your tracking goal and see your progress per year and per property.

What the IRS Evaluates

During an audit, the IRS typically looks for:

• Evidence that services were actually performed
• Regular and continuous involvement across the year, not a burst in December
• Contemporaneous logs, written at or near the time of the work
• Operational decision-making rather than passive monitoring
• For the 100-hour test, a credible comparison with everyone else who worked on the property

The regulations allow you to prove participation “by any reasonable means”, such as appointment books, calendars or narrative summaries. In practice, the Tax Court routinely rejects “ballpark guesstimates” reconstructed at tax time. Material participation is about running the rental activity, not merely owning it.

---

How REPSLog Helps Track Participation Properly

Tracking hours across multiple properties and several participants can quickly become complicated.

The REPSLog app helps by:

• Logging activities by typing or by voice, with voice logging picking out the duration, property and date as you speak
• Timing on-site work live with the timer
• Turning past calendar events into entries with calendar integration (Google, Microsoft 365 or your device calendar)
• Attaching invoices, receipts and photos to each entry as evidence
• Tracking progress toward the 100-hour, 500-hour or 750-hour thresholds
• Keeping STR and long-term rental properties separate
• Recording other participants so you can show you did more than anyone else
• Exporting a CPA-ready PDF, Excel or CSV with the date and time each entry was created, which shows the log was kept as you went

When material participation depends on whether you did more work than anyone else, clear participant tracking becomes critical.

---

Frequently Asked “Does This Count?” Questions

Does travel time count toward material participation?

Generally yes, if the travel is directly tied to performing operational services for the rental activity. Courts have discounted long trips where little work was done, so log the purpose and the work performed along with the drive.

Does drive time between properties count?

Yes, when you are traveling to perform services at those properties.

Do emails count toward material participation?

Yes, if they involve tenant management, contractor coordination, or operational decisions. Keep the time realistic; a log full of one-hour entries for single emails invites questions.

Does bookkeeping count toward material participation?

Yes, when it is part of actively managing rental operations. Reviewing statements purely as an owner is investor-type activity and does not count unless you are directly involved in day-to-day management.

Does research count toward material participation?

Generally no, unless it directly results in executing operational actions for your rental activity.

Does overseeing a property manager count?

It can, if you are actively making final operational decisions rather than passively receiving updates. Two cautions: the manager’s hours count as “any other individual” for the 100-hour test, and the facts-and-circumstances test is not available if someone else is paid to manage the property. See qualifying for REPS with a property manager.

Do my spouse’s hours count?

For material participation, yes. Your spouse’s work on the activity counts as yours, even if they are not on the title. For the REPS 750-hour and more-than-half tests, no; one spouse has to meet those alone.

Does acquisition analysis count?

It may count toward the REPS 750 hours if acquisition is part of your ongoing real property business and tied to execution. It generally does not count toward material participation in the rentals you already operate.

Do education and seminars count?

Usually no, unless directly tied to current operational decisions.

For STR, is 100 hours enough?

Often yes, if the average guest stay is 7 days or less, you exceed 100 hours, and no other individual (cleaner, co-host, manager) spent more time on the property than you.

For REPS, what are the hour requirements?

You must perform more than 750 hours in real property trades or businesses in which you materially participate, and those hours must be more than half of your total working time for the year.

---

Final Takeaway

Material participation is not about labels like “travel” or “email.”

It is about whether you were actively operating the rental activity in a regular, continuous, and substantial way.

When in doubt, ask:

Were you running the rental, or simply observing an investment?

That distinction is what ultimately determines whether your hours qualify.

Please Note: REPSLog is NOT a lawyer or CPA, and this is not legal or financial advice. Please consult a qualified professional for guidance regarding IRS rules and regulations.