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The short-term rental tax loophole is a strategy used to reduce the tax burden for real estate investors. Also known as the Airbnb tax loophole, this strategy allows rental owners to offset their income with real estate losses, significantly reducing their tax bills.

TurboTenant put this guide together to help you understand the benefits of the loophole and the IRS rules for it. This story will also cover documentation best practices and five common errors to avoid so you can make this powerful tax strategy work for your portfolio.

Basis of the STR Loophole: Passive vs. Active Income

The short-term rental tax loophole hinges on classifying your investment property as a business activity rather than a rental activity. The result? Your rental’s income and expenses become active, not passive, activity. Since this tactic depends on the distinction between passive and active income, let’s clarify those terms.

Passive: Income earned with minimal effort, like royalties, interest, dividends, and annuities. According to the IRS, rental income is considered passive income by default.

Active: Ordinary, W-2, nonpassive earnings that require your active involvement.

Why does the difference between active and passive income matter? The IRS doesn’t allow us to offset passive losses against active income. Ordinarily, if you have a 9-to-5 W-2 job and a rental property, you have both active and passive income. When you have a loss from your rental property, you can’t deduct that loss from your W-2 wages.

But if your rental property counts as a source of active income, you can offset your W-2 wages with the rental’s losses. That gives you a way to significantly minimize your tax burden, making this an effective tax strategy for real estate investors.

Did you know? This strategy is considered a loophole because it was initially intended for use by hotels and motels. This was before the rise of hosting platforms such as Airbnb, which significantly changed the hospitality industry. So even though the term loophole may sound shady, this strategy is documented in IRS regulations and publications, and the tax court has upheld it in several cases.

How to Qualify as a Short-Term Rental

Your investment property can qualify as a short-term rental in two ways:

1. The average rental stay is seven days or fewer.
2. You offer substantial services to renters during their stay, and the average stay is 30 days or fewer.

Substantial services go beyond offering garbage collection, internet service, or access to a kayak or paddleboard at a vacation rental. Any of these offerings may count as a substantial service:

• Concierge services
• Daily linen changes
• Meal services
• Transportation
• Vouchers for activities or attractions

IRS Exceptions for Short-Term Rentals

The Read more

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The number of high-income households in a community can have a large impact on local economics. High-income households — defined by the Internal Revenue Service (IRS) as those earning $200,000 or more per year — generally contribute more dollars to the local and state tax bases and to surrounding businesses. At the same time, this relative economic strength may sway entities to cater more to the preferences of these households to earn their patronage. Quick growth in high-income households may accelerate tax collection and business prosperity, just as their departure may cause some concern for local politicians, business owners, and neighbors.

With this in mind, SmartAsset ranked 357 cities based on the change in high-income households between 2023 and 2024, according to the latest U.S. Census data.

Key Findings

• High-income households skyrocketed in this Connecticut city. Waterbury, Connecticut, had the highest relative growth in high-income households this year, going from 643 in 2023 to 2,295 households in 2024 — a 271% increase. The relative portion of high-income households grew from 1.4% of all households to 5.2%. Meanwhile, the median household income in Waterbury in 2024 remained fairly low at $47,881.
• In six other cities, the number of high-income households grew by over 70%. After Waterbury, the cities with the most growth in high-income households include Inglewood, California (88.9%); Montgomery, Alabama (82.6%); Menifee, California (82.0%); Albany, New York (72.1%), Beaumont, Texas (71.8%); and Lakeland, Florida (71.4%).
• More than 40% of households are high-income in these cities. Santa Clara, California, has the highest proportion of high-income households in the community, with 46.9% earning $200,000 per year or more in 2024. Other cities with large high-income populations include Sunnyvale, California (46.3%); Fremont, California (43.3%); San Mateo, California (42.6%); and Bellevue, Washington (41.8%).
• Lansing, Michigan, saw the biggest decline in high-income households. The number of high-income households in Lansing dropped from 1,374 in 2023 to 703 in 2024, a 46.2% decline. Meanwhile, the median household income remained steady both years at around $55,250. Other cities that saw large declines in high-income households include Akron, Ohio (-36.8%); Allentown, Pennsylvania (-35.0%); Norman, Oklahoma (-32.0%); and Killeen, Texas (-27.3%).

SmartAsset

Top 50 Cities With the Most Growth in High-Income Households

Cities are ranked based on the percentage increase

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Inquiries from wealthy Americans seeking alternative residency and citizenship abroad jumped 183% between the first quarter of 2024 and the first quarter of 2025, according to data from global advisory firm Henley & Partners. By the end of Q3 2025, applications from U.S. nationals were already 67% higher than the total for all of 2024, which itself was a record year.

The trend has a name in the investment migration industry: the “Plan B passport.”

The shift is not theoretical. It is showing up in hard application numbers across Europe’s remaining golden visa programs — and nowhere more visibly than in Portugal.

Movingto.com, an immigration advisory firm, has seen a 40% increase in American inquiries since 2023. The profile of interested parties also has changed, expanding beyond the ultra-wealthy to include tech founders, doctors, retirees, and families with young children who want a European safety net.

Americans Are Now the Dominant Force in Golden Visa Applications

U.S. nationals accounted for over 30% of all investment migration applications processed by Henley & Partners in 2025, nearly double the combined total of the next five investor nationalities — Turkish, Indian, Chinese, British, and Filipino. Compared to five years ago, the volume of American applicants has increased by more than 1,000%.

Portugal’s Golden Visa program has absorbed much of this demand. According to official AIMA statistics compiled by Movingto.com, the program has attracted approximately 17,700 main applicants and over €7.3 billion in total investment since launching in 2012. Including family members, more than 42,600 people have obtained residency through the program.

The American share of those approvals has shifted dramatically. U.S. nationals now represent over 30% of all Golden Visa approvals, up from roughly 5% just five years ago, according to industry analysis. Meanwhile, the number of Americans registered as residents in Portugal reached 20,959 in 2024 — a nearly 50% increase from 2023 — with approximately 4,800 new U.S. residents regularized in that year alone, according to data from Portugal’s immigration agency AIMA.

A Shrinking Map of Options

Part of what’s driving the urgency is that the available programs are disappearing. Spain officially closed its Golden Visa to new applications in April 2025, ending a program that had attracted thousands of investors through real estate and over €1 billion annually in foreign investment. Ireland shuttered its investor visa in 2023. The United Kingdom ended its Tier 1 investor route in 2022.

Portugal itself eliminated real estate purchases as a qualifying route in October 2023 under the “Mais Habitação” housing law. But unlike Spain, Portugal kept the program alive — redirecting it toward investment funds, scientific research, cultural heritage donations, and job creation.

The result is that for Americans seeking a European Union residency pathway with minimal physical pre

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As the year winds down, many may feel a natural pull towards resetting their spaces. End-of-year decluttering has almost become a ritual, serving as a way to clear both mental and physical clutter before stepping into a new chapter. Closets, spare rooms, and underused corners are the first targets because they quietly accumulate disorder throughout the course of the year.

At the same time, the way people use their homes has fundamentally changed in recent years. Remote and hybrid work are no longer temporary arrangements. Between 2019 and 2023, the four-year period studied by the U.S. Census Bureau, remote workers more than doubled from 9 million to over 22 million. While some companies have mandated return-to-office policies in the years since, it’s clear that millions will remain at home.

Despite the growth in working from home, many household workspaces are improvised from the pandemic years and are not designed intentionally. Desks are squeezed into bedrooms, paperwork is piled into closets, cords are snaking across the floor, and chaos generally prevails. This is where customizable workspace systems can come in handy—when thoughtfully designed, modular and customizable storage solutions can transform a workspace from a source of stress to something calming.

Lazzoni has taken a look at various decor data from sources including Angie’s Roost, Instagram, Simply Enough, and more to assemble this guide to walk you through a three-step approach to designing an ideal home workspace.

What is a customizable workspace?

A customizable workspace is a work environment that is designed to adapt to how you actually use the space, as opposed to forcing you to adapt to fixed furniture or a one-size-fits-all layout. Instead of static desks, shelves, or cabinets, customizable systems use modular components that can be adjusted, expanded, and reconfigured over time.

At its core, a customizable workspace prioritizes function, flexibility, and longevity. For example, shelving height can change as storage needs evolve, and work surfaces can be repositioned to accommodate new equipment. This approach acknowledges a simple reality: The way you work today is unlikely to be the same way you will work years from now.

Clutter is often a symptom of misaligned storage as opposed to too many belongings. When a workspace is customizable, every item can have a designated place that reflects how frequently it is used. Daily tools stay within arm’s reach, occasional items move higher and visual noise decreases as a result. A sense of calm is one reason customizable systems are increasingly recommended.

In the context of a new year reset, a customizable workplace becomes more than a design choice. Rather, it’s a practical framework for maintaining order, focus, and flexibility in your life as priorities shift and routines evolve.

The 3-step system for designing a home workspace

Designing an ideal home workspace using customizable systems won’t be easy, but it will be more than worth the effort. These three steps will hit upon the foll

CheapInsurance.com compiled statistics on gas prices in the U.S. using data from AAA. Gas prices are current as of February 23.

U.S. by the numbers
– Gas current price: $2.94
– Week change: +$0.01 (+0.3%)
– Year change: -$0.21 (-6.6%)
– Historical expensive gas price: $5.02 (6/14/22)

– Diesel current price: $3.71
– Week change: +$0.07 (+1.8%)
– Year change: +$0.03 (+0.8%)
– Historical expensive diesel price: $5.82 (6/19/22)

States with the least expensive gas
#1. Oklahoma: $2.34
#2. Arkansas: $2.45
#3. Kansas: $2.46
#4. Mississippi: $2.49
#5. Louisiana: $2.51
#6. Missouri: $2.51
#7. Wisconsin: $2.54
#8. Iowa: $2.55
#9. Texas: $2.55
#10. Nebraska: $2.55

States with the most expensive gas
#1. California: $4.63
#2. Hawaii: $4.38
#3. Washington: $4.33
#4. Oregon: $3.89
#5. Nevada: $3.68
#6. Alaska: $3.56
#7. Arizona: $3.23
#8. Pennsylvania: $3.14
#9. Washington, D.C.: $3.11
#10. Vermont: $3.00

This story was produced by CheapInsurance.com and reviewed and distributed by Stacker.

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