GUIDES & RESOURCES
Rental Tax Guides & Free Calculators
Plain-English guides for rental property owners — each IRS material participation test, what it requires, who it fits, and how to document your hours — plus free tax planning tools. New to the topic? Start with what material participation means.
The seven material participation tests
You only need to satisfy one of the seven tests under Reg. §1.469-5T to materially participate in a rental activity. Start with the arithmetic tests; keep the subjective ones as backstops.
The 500-Hour Test
Participate more than 500 hours in the activity during the year. The most-used test — no comparisons, no lookbacks, just hours.
The Substantially-All Test
Your participation is substantially all of the participation in the activity. No hour minimum — the solo operator's test.
The 100-Hour Test
More than 100 hours, and at least as much as any other individual. Lower bar than 500 hours, with a comparative catch.
The Significant Participation Activity Test
More than 100 hours in each of several activities, 500+ hours combined. The portfolio landlord's aggregation test.
The 5-of-10-Year Test
Materially participated in any 5 of the last 10 tax years. A lookback test for owners stepping back — archives decide it.
The Personal Service Activity Test
Three prior years of material participation in a personal service activity. Narrow, but powerful where it applies.
The Facts-and-Circumstances Test
Regular, continuous, substantial participation over 100 hours. The flexible catch-all — and the most subjective.
Free tax planning tools
STR Loophole Calculator
Estimate short-term rental tax savings with 2026 tax brackets, cost segregation, bonus depreciation and loss limits.
7-Day Rule Calculator
Paste your guest stays and get the average period of customer use that decides whether a short-term rental clears the 7-day rule.
Cost Segregation Calculator
Estimate rental property depreciation and potential tax savings with our free cost segregation calculator.
From the PropHours blog
PropHours Blog
Tax-smart articles for rental owners: REPS, the short-term rental tax loophole, cost segregation, and the hour logs that make it all work.
Common questions
Which test should I look at first?
Start with the 500-hour test and the 100-hour test — they give the clearest yes-or-no answers. Portfolio owners should also check the significant participation activity test.
Do these guides replace tax advice?
No. They explain the tests in general terms. Whether you materially participate depends on your facts — review IRS Publication 925 and consult a qualified tax professional.
How does PropHours help with these tests?
Every test is ultimately proven with records. Log work as it happens with a timer or voice note, attach receipts and photos as evidence, organize by property, and export a CPA-ready report. PropHours records your work; it does not determine tax eligibility.
These guides explain the material participation tests under Reg. §1.469-5T in general terms and are not tax, legal, or financial advice. Tax background: IRS Publication 925. Consult a qualified tax professional about your circumstances.