In context
The seven material participation tests under Treas. Reg. §1.469-5T(a):
- >500 hours in the activity during the tax year
- Substantially all of the activity participation is by the taxpayer
- >100 hours and more than any other individual
- Significant participation activity (>100 hours) aggregating to >500 hours
- Material participation in the activity for any 5 of the prior 10 years
- Personal service activity with material participation in any 3 prior years
- Facts and circumstances — regular, continuous, and substantial participation
For STR operators, test 3 is the typical qualification: 100+ hours of personal management (bookings, communications, cleaning oversight, maintenance) with no third-party manager exceeding that time.
For REPS taxpayers with multiple rental properties, the §469(c)(7)(A) aggregation election is typically required — without it, material participation must be tested separately for each property.
See /passive-activity/ for the topic hub.