🏔️ How the STR Loophole Benefits Buyers of Park City Short-Term Rentals
Discover how the STR loophole helps Park City buyers offset taxes and boost ROI across Deer Valley, Old Town, and other top rental neighborhoods.
💼 Understanding the STR “Loophole”
If you’re buying a short-term rental in Park City, one of the most valuable financial tools you can use is the STR tax loophole.
Typically, rental income is passive — meaning it can’t offset your W-2 or business income. But if your rental’s average guest stay is seven days or less, and you actively manage the property, you may qualify for active income treatment under IRS rules.
That means you can:
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Deduct depreciation, furnishing, and operating costs against regular income.
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Use cost segregation studies for accelerated write-offs.
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Reduce taxable income, improving overall ROI.
As tax advisory firms like The Real Estate CPA and KBKG emphasize, the impact can be enormous — especially in high-income markets like Park City.
📊 Park City STR Market Overview (2025 Estimates)
Here’s a snapshot of Park City’s strongest rental submarkets, showing how property values and nightly rates stack up:
| Neighborhood / Area | Typical Purchase Price | Avg. Nightly Rate (ADR) | Occupancy Rate | Key Features & Appeal |
|---|---|---|---|---|
| Upper Deer Valley | ~$4.6M+ | $600–$1,000+ | ~55–60% | Ultra-luxury ski-in/ski-out estates with premium amenities |
| Lower Deer Valley | ~$2.5M–$3.5M | $500–$900 | ~55% | Family-friendly luxury; easy Main Street access |
| Old Town / Main Street | ~$1.1M–$1.3M | $300–$500 | ~60% | Walkable dining, nightlife, and ski access |
| Prospector | ~$400K–$1M+ | $200–$350 | ~50% | Centrally located and affordable; mid-term stay demand |
| Canyons Village | ~$1.2M–$10M+ | $400–$600 | ~55% | Resort base; ski lifts, events, and year-round recreation |
| Bear Hollow | ~$1M–$2M | $250–$400 | ~50% | Family and group lodging near Olympic Park |
| Kimball Junction | ~$700K–$1.3M | $200–$350 | ~50% | Walkable to dining and retail; easy access to I-80 |
Sources: AirDNA, Airbtics, Zillow, Redfin
📍 Deep Dive: Park City’s Top STR Neighborhoods
🏔️ Upper Deer Valley
Luxury, exclusivity, and slope-side access.
Homes here average $4.6M+, with nightly rates often exceeding $1,000 during ski season. Occupancy remains strong due to direct lift access and resort amenities.
Investor edge: Exceptional depreciation potential for high-income buyers using the STR loophole.
🎿 Lower Deer Valley
Blending family appeal with proximity to downtown, Lower Deer Valley homes range $2.5M–$3.5M, with ADRs around $500–$900.
Investor edge: Balanced seasonal demand and strong guest satisfaction drive consistent performance.
🏙️ Old Town (Historic Main Street)
The heart of Park City — perfect for walkable, year-round bookings. Median home values sit near $1.2M, with $300–$500 nightly rates common.
Investor edge: Self-managed investors easily qualify for material participation, unlocking full STR tax benefits.
🏡 Prospector
Affordable and centrally located, Prospector attracts longer stays from families and business travelers. Homes average $400K–$1M, ADR around $200–$350.
Investor edge: Lower entry price with reliable occupancy; good for first-time STR investors.
🏂 Canyons Village
A premier resort base area with modern condos and hotels. Condo pricing starts around $1.2M, with luxury homes exceeding $20M.
Investor edge: High ADRs and peak-season demand combine with strong depreciation deductions.
🌲 Bear Hollow
Townhomes near the Utah Olympic Park attract family groups. Prices hover around $1M–$2M, ADR $250–$400.
Investor edge: Great mix of affordability, comfort, and repeat guest potential.
🛍️ Kimball Junction
Kimball Junction offers convenience and year-round access to retail, dining, and trails. Homes range $700K–$1.3M, ADR $200–$350.
Investor edge: Lower turnover management and consistent bookings make it an easy-maintenance STR.
💰 How the STR Loophole Amplifies Returns
The tax advantages compound Park City’s already-strong rental returns:
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Increased deductions lower taxable income.
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Depreciation offsets profits from other investments.
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Active classification allows offsetting W-2 income (subject to qualification).
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Cost segregation accelerates depreciation on furnishings and improvements.
Example:
An actively managed $1.2M Old Town STR could yield $25K–$50K in annual tax savings through depreciation alone, while producing positive rental income.
🧭 Matching Investment Goals to Neighborhoods
| Investor Goal | Recommended Areas | Why It Fits |
|---|---|---|
| Maximize luxury yield | Upper & Lower Deer Valley | High nightly rates, elite clientele |
| Achieve balanced returns | Old Town, Canyons Village | Year-round occupancy, strong resale value |
| Enter affordably | Prospector, Bear Hollow, Kimball Junction | Lower entry costs, stable occupancy |
| Optimize for taxes | Any self-managed STR | Easier qualification for “active” tax status |
🧾 Steps to Leverage the STR Loophole
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Confirm eligibility: The average stay must be 7 days or fewer.
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Track participation: Spend 100+ hours/year managing bookings and maintenance.
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Keep records: Document management activity and expenses.
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Work with a tax pro: Partner with STR-savvy CPAs like KBKG or The Real Estate CPA.
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Reevaluate yearly: IRS rules and interpretations change — stay compliant.
💡 Final Takeaway
Park City offers one of the most attractive combinations of luxury vacation demand and tax-advantaged real estate ownership in the U.S.
Whether you’re investing in Deer Valley for premium returns or Kimball Junction for steady occupancy, pairing the STR loophole with smart market selection can make your rental property both a lifestyle asset and an income engine.
🔗 Sources & References
IRS Publication 925 • The Real Estate CPA • KBKG • AirDNA • Airbtics • Redfin • Zillow
✍️ Author Byline
Wayne Levinson, Park City Real Estate Specialist
Helping buyers and investors find high-performing properties in Utah’s most sought-after mountain markets.
