The 100-hour test has two parts that must both be satisfied: you participated for at least 100 hours, and no other individual participated more than you did. Most investors focus on the first part. The second part is what trips up their audit defense.
If you use the 100-hour test to qualify for the STR loophole, you need to know how many hours your property manager, cleaners, and co-hosts are putting in. Not just approximately. Specifically enough to demonstrate — with documentation — that you exceeded everyone.
- The "more than anyone else" requirement compares you to individuals, not companies.
- Property managers, cleaners, co-hosts, and even contractors with significant on-site time all count.
- You don't need exact hours — reasonable documented estimates work.
- If you can't confidently exceed your PM, target the 500-hour safe harbor instead.
Who Counts as a "Participant"
For the purposes of Test 3, a participant is any individual who provides services with respect to the activity during the tax year. This includes:
- Property managers
- Individual cleaners or housekeepers
- Co-hosts (including Airbnb co-hosts listed on your account)
- Maintenance contractors who spend significant time at the property
- Family members who work on the rental
It does not include: entities (the company as a whole), investors who merely review financials without providing operational services, or professionals like your accountant whose services relate to the investment rather than operations.
The individual-level rule is critical. If your property management company employs a team and multiple people touch your account, you compare your hours to each person individually — not to the company's collective hours. Your designated property manager at a large PM company might only log 60-80 hours on your property personally, which is much easier to exceed than the company's aggregate.
How to Track Your Property Manager's Hours
Option 1: Request hour reports directly. Many PMs will provide time logs or monthly activity summaries on request, especially if they understand why you're asking. Some PM software automatically generates these reports. Ask at the start of the year, not at tax time.
Option 2: Estimate based on tasks. If your PM won't or can't provide exact hours, build your own estimate using the tasks they perform:
- Guest messaging: estimate average time per message × average daily message volume × days per year
- Pricing updates: estimated time per adjustment × frequency
- Turnover coordination: time per turnover × annual turnovers
- Maintenance coordination: average time per issue × annual issue frequency
- Property inspections: time per visit × frequency
Document your methodology and keep it conservative. If you estimate your PM spends 80-100 hours, treat 100 hours as your benchmark.
Option 3: Restructure the relationship. If your PM handles too many high-hour activities for you to compete, see our guide on using the STR loophole with a property manager for strategies to retain the hours-heavy tasks yourself.
How to Track Cleaner Hours
This is the most straightforward calculation because turnover cleaning is highly regular and predictable.
Formula: Total cleaner hours = Number of turnovers × Average hours per clean
If you have 48 turnovers per year and each cleaning takes 2.5 hours, your cleaner's total is 120 hours. You need to exceed 120 hours.
If the math shows one cleaner will exceed your hours, consider the cleaner rotation approach: split turnovers between two or three different cleaners or cleaning companies so no single individual accumulates a high total.
Keep a record of each turnover: date, cleaner or company, and duration. Your payment records (checks, Venmo, Zelle payments) corroborate this indirectly.
How to Track Co-Host Hours
If you use an Airbnb co-host or informal arrangement with a friend or family member:
- Estimate their hours based on the tasks they handle — guest messaging, check-in coordination, property visits, etc.
- Keep a record of what they're responsible for and approximate time per task.
- If they handle a significant portion of guest communication, make sure your total for other activities exceeds their messaging time.
Your co-host's hours are particularly important because guest communication is one of the largest time consumers for STR operations. If your co-host handles all messaging and you handle everything else, verify the math works in your favor.
Documenting Others' Hours
You don't need to produce a signed time report from your cleaner. But you do need something more than "I think I spent more time than they did."
A defensible approach:
- Keep a spreadsheet listing each service provider, the tasks they're responsible for, and your estimated hours per month.
- Document your methodology (e.g., "42 turnovers × 2.5 hours per clean = 105 cleaner hours for Cleaning Services A").
- Save payment records that corroborate the level of service.
- Get written estimates from your PM if possible — an email or contract specifying services and approximate time is helpful.
If you're ever audited, the IRS wants to see that you applied reasonable effort to evaluate others' hours, not that you have perfect data. A documented, logical estimate based on actual service patterns is what "reasonable" looks like.
When to Choose the 500-Hour Test Instead
If you genuinely cannot exceed your property manager's hours — because they manage the property extensively and you have limited involvement — targeting the 500-hour safe harbor eliminates the comparison problem entirely.
At 500 hours, you only need to document your own participation. The comparison requirement disappears. The tradeoff is that 500 hours requires roughly 10 hours per week, which is a significant time commitment alongside a full-time job.
Spouse Hours and the Comparison
If you file jointly, your spouse's hours count toward your total. Combined hours from both spouses are compared against each other individual's hours. This means a 200/200 split between spouses (400 combined) easily exceeds a property manager with 120 hours.
The Bottom Line: Tracking others' hours doesn't need to be complicated. Use reasonable estimates, document your methodology, and aim to clearly exceed everyone involved.
Ready to see if you qualify? Try the free STR loophole calculator →