What counts as a personal day, what doesn't, and how the vacation-home cap interacts with material participation.
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If an owner's personal use of a rental property exceeds the greater of 14 days or 10% of the days it's actually rented at fair market value, the IRS treats it as a dwelling used as a home. That caps deductible rental expenses at the rental income the property generated and limits how much of a loss can be deducted, even if the owner otherwise clears the material participation tests described in our STR loophole guide.
Published by Source One Stays · Updated October 5, 2026
Personal use beyond the greater of 14 days or 10% of fair-rental days triggers vacation-home treatment and caps expense deductions at rental income for the year. Excess expenses generally carry forward rather than being lost.
Any day used by the owner, by family members, or by anyone paying below fair market rent generally counts as personal use, even if that person pays something.
Days spent substantially full-time on repairs and maintenance don't count against the personal-use limit, even if the owner stays at the property overnight to do that work.
Only if they pay below fair market rent. A friend paying the going rate is a normal business rental day.
Keep personal days under the 14-day or 10% threshold, and keep good records distinguishing personal stays from legitimate maintenance trips.
It's a separate limit that stacks on top. Clearing the material participation test doesn't override the vacation-home expense cap if personal use crosses the threshold.
It's a separate limit that stacks on top. Clearing the material participation test doesn't override the vacation-home expense cap if personal use crosses the threshold.
Sources: IRS Publication 527, Residential Rental Property.
Related guides: The STR loophole and material participation · Repairs vs. improvements
This is general information, not tax or legal advice. Every situation is different, talk with your CPA about how this applies to you.
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