The Short-Term Rental Tax Strategy: A High Earner's Guide to Offsetting W-2 Income

Disclaimer: This article is for educational purposes only and does not constitute tax, legal, or financial advice. Tax laws are complex and subject to change. Consult a qualified CPA or tax attorney before implementing any tax strategy.

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The High Earner’s Tax Problem

If you’re a physician, attorney, tech executive, or finance professional earning $300,000 or more annually, you’ve likely experienced a frustrating reality: the harder you work, the more the tax code seems to work against you.

At high income levels, you face:

• Federal marginal rates up to 37% (plus 3.8% Net Investment Income Tax)
• State income taxes adding another 5-13% in high-tax states
• Phased-out deductions and credits that middle-income earners enjoy
• Limited tax-advantaged contributions ($23,500 to 401k in 2025, $7,000 to IRA)

Traditional tax shelters barely make a dent. Max out your 401(k)? That’s $23,500 off a $500,000 income—less than 5%. Backdoor Roth? Only $7,000 per year. HSA? $8,550 for families.

Meanwhile, you watch real estate investors claim massive paper losses against their income. But when you try to invest in rental properties, you discover the passive activity loss rules that lock those losses away, unusable against your W-2 income.

There is, however, a legitimate, IRS-sanctioned strategy that allows high earners to generate non-passive losses from real estate—losses that directly offset W-2 income. It involves short-term rentals, and it’s been used by thousands of sophisticated investors to legally reduce their tax burden by tens or even hundreds of thousands of dollars.

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Why Traditional Rental Real Estate Fails High Earners

Before understanding the short-term rental strategy, you need to understand why conventional rental properties don’t work for most high-income professionals.

The Passive Activity Loss Rules (IRC Section 469)

In 1986, Congress enacted the passive activity loss rules to prevent wealthy taxpayers from using “tax shelter” investments to eliminate their tax liability. Under IRC Section 469, losses from “passive activities” can only offset income from other passive activities—not wages, salaries, or active business income.

Rental real estate is specifically defined as a passive activity, regardless of how much time you spend on it. This means the depreciation and operating losses from your rental properties sit in a suspended loss account, waiting for future passive income or a disposition event.

The $25,000 Exception (That Doesn’t Apply to You)

There is a $25,000 exception that allows taxpayers to deduct rental losses against ordinary income. But here’s the catch:

• It begins phasing out at $100,000 AGI
• It’s completely eliminated at $150,000 AGI
• If you’re reading this article, you almost certainly earn too much to qualify

Real Estate Professional Status (REPS)

The most commonly cited workaround is qualifying as a Real Estate Professional under IRC Section 469(c)(7). This allows rental activities to be treated as non-passive.

However, REPS requires:

1. 750+ hours annually in real property trades or businesses
2. More than 50% of your working time in real estate activities

For a surgeon working 2,500 hours per year, this means spending 2,501+ hours in real estate—essentially impossible while maintaining your career. REPS is viable for stay-at-home spouses or those transitioning to full-time real estate, but not for most high-income professionals.

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The 7-Day Rule: How Short-Term Rentals Escape Passive Classification

Here’s where the strategy gets interesting. While rental activities are generally passive, the IRS created a specific exception for rentals where the average guest stay is 7 days or less.

The Legal Foundation

Treasury Regulation §1.469-1T(e)(3)(ii)(A) states that an activity is not a rental activity if:

“The average period of customer use for such property is seven days or less”

This single sentence is the foundation of the entire strategy.

When your rental doesn’t qualify as a “rental activity” under the passive activity rules, it’s reclassified as a trade or business. And unlike rentals, trade or business losses can be non-passive if you materially participate in the activity.

The Alternative: Substantial Services Test

There’s a second path. Under Reg. §1.469-1T(e)(3)(ii)(B), an activity is also not a rental if:

“The average period of customer use…is 30 days or less, and significant personal services…are provided”

Significant personal services include:

• Daily housekeeping
• Concierge services
• Meals or food service
• Activity coordination or tours

Most STR operators use the 7-day rule rather than substantial services, as it’s cleaner and doesn’t require offering hotel-like amenities.

What This Means Practically

If you operate a vacation rental on Airbnb, VRBO, or similar platforms where the average guest stay is under 7 days, your property is not classified as a rental activity for tax purposes. It’s a trade or business.

This distinction is everything.

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Material Participation: The Second Key

Escaping the rental classification is only step one. To generate non-passive losses, you must also materially participate in the short-term rental activity.

The IRS defines material participation through seven tests under Reg. §1.469-5T. You only need to meet one:

Test	Description	Notes
1. 500-Hour Test	You participate 500+ hours during the year	Most commonly used for STRs
2. Substantially All Test	Your participation is substantially all of the participation	You do everything yourself
3. 100-Hour/More Than Others Test	100+ hours AND more than any other individual	Useful if you have a co-owner
4. Significant Participation Activities	Multiple activities each with 100+ hours that aggregate to 500+	Combine multiple STRs
5. Prior 5-Year Participation	Materially participated in 5 of the last 10 years	Build on historical participation
6. Personal Service Activity	Material participation in any 3 prior years	Limited to personal service activities
7. Facts and Circumstances	100+ hours of regular, continuous, substantial participation	Last resort; hardest to prove

The 500-Hour Test in Practice

For most STR investors, the 500-hour test is the target. It sounds like a lot—essentially 10 hours per week, every week—but STR activities add up quickly.

Activities that count toward material participation:

• Guest communication (inquiries, booking confirmations, check-in instructions, reviews)
• Pricing optimization and revenue management
• Cleaning coordination and quality verification
• Maintenance and repairs
• Restocking supplies and consumables
• Marketing (listing optimization, photography, social media)
• Bookkeeping and financial management
• Researching regulations, markets, and competitors
• Travel to and from the property
• Property improvements and upgrades
• Interviewing and managing cleaners, handymen, or contractors

Activities that do NOT count:

• Time spent as an investor (reviewing financials passively)
• Work done by employees or contractors (their hours don’t count as yours)
• Time not directly related to STR operations

The Spouse Advantage

If you’re married and file jointly, a non-working or part-time spouse can handle the material participation requirements. Their hours count, and the losses flow through your joint return to offset your W-2 income.

This is particularly powerful for dual-income households where one spouse has flexibility—they manage the STR portfolio while the other focuses on their high-income career.

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Cost Segregation: Accelerating Depreciation

Now we get to the mechanism that creates massive paper losses: accelerated depreciation through cost segregation.

Standard Depreciation Is Slow

Normally, residential rental property is depreciated over 27.5 years. But because short-term rentals are classified as trade or business property (not residential rental), they’re depreciated over 39 years—even slower.

For an $800,000 property (excluding land), straight-line depreciation generates only ~$20,500 in annual deductions. Helpful, but not transformative.

Cost Segregation Reclassifies Assets

A cost segregation study analyzes your property and reclassifies components into shorter recovery periods:

Component Category	Examples	Recovery Period
5-Year Property	Appliances, carpeting, certain fixtures, landscaping	5 years
7-Year Property	Furniture, office equipment	7 years
15-Year Property	Land improvements, driveways, sidewalks, fencing	15 years
39-Year Property	Building structure, roof, HVAC	39 years

Typically, 20-30% of a property’s depreciable basis can be reclassified into these shorter-lived categories.

Cost Segregation Economics

Professional cost segregation studies cost between $3,000 and $10,000 depending on property size and complexity. The ROI is typically 10-50x the cost of the study.

Reputable cost segregation providers include:

• KBKG - One of the largest teams of Certified Cost Segregation Professionals in the nation; they offer free feasibility analyses and an online calculator to estimate potential savings
• Madison SPECS - Known for their “Smart Tour” remote study option that can reduce costs; over $3B in documented tax savings
• RE Cost Seg - Popular choice for individual investors and smaller portfolios with competitive pricing

Before closing on a property, order your cost segregation study. Most providers offer free feasibility analyses to estimate your potential savings.

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Bonus Depreciation: The Multiplier Effect

Cost segregation identifies short-lived assets. Bonus depreciation allows you to deduct them immediately.

The 2025 Legislation Update

Critical Update: The One Big Beautiful Bill Act, signed into law on July 4, 2025, restored 100% bonus depreciation for property placed in service after January 19, 2025.

Prior to this legislation, bonus depreciation was phasing down:

• 2023: 80%
• 2024: 60%
• 2025: 40% (pre-legislation)
• 2026: 20%
• 2027: 0%

Now, for any property placed in service after January 19, 2025, you can take 100% bonus depreciation on all eligible assets identified in your cost segregation study.

What Qualifies for Bonus Depreciation

• All 5-year, 7-year, and 15-year property from cost segregation
• New or used property (since 2017, used property qualifies)
• Must be placed in service during the tax year (available for guests)

The Combined Effect

When you combine cost segregation with 100% bonus depreciation:

1. Purchase property with $600,000 depreciable basis (excluding land)
2. Cost segregation identifies $150,000 (25%) as 5/7/15-year property
3. Year 1 bonus depreciation: $150,000 × 100% = $150,000 deduction
4. Remaining $450,000 depreciated over 39 years = ~$11,500/year

That $150,000 paper loss in Year 1 can offset $150,000 of W-2 income—creating tax savings of $55,000-$75,000+ depending on your tax bracket.

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Case Study 1: Tech Executive

Let’s walk through a detailed example.

Profile

• Taxpayer: Software engineering director at a major tech company
• W-2 Income: $500,000
• Filing Status: Married filing jointly
• State: California (13.3% top rate)
• Marginal Tax Rate: 37% federal + 3.8% NIIT + 13.3% state = 54.1%

The Investment

• Property: Mountain vacation rental in Lake Tahoe
• Purchase Price: $850,000
• Land Value: $170,000 (20%)
• Depreciable Basis: $680,000
• Financing: 75% LTV ($637,500 mortgage at 7.5%)
• Down Payment: $212,500

Cost Segregation Results

Category	Amount	% of Basis
5-Year Property	$95,200	14%
7-Year Property	$54,400	8%
15-Year Property	$68,000	10%
39-Year Property	$462,400	68%
Total	$680,000	100%

Year 1 Tax Impact

Bonus Depreciation (100%):

• 5-year property: $95,200
• 7-year property: $54,400
• 15-year property: $68,000
• Total bonus depreciation: $217,600

Operating Expenses (typical for Tahoe STR):

• Mortgage interest: ~$47,000
• Property taxes: ~$10,000
• Insurance: ~$4,000
• Utilities: ~$6,000
• Cleaning/supplies: ~$15,000
• Management software: ~$1,200
• Repairs/maintenance: ~$5,000
• Total operating expenses: ~$88,200

Gross Rental Income: ~$75,000

Year 1 Tax Loss Calculation:

• Gross income: $75,000
• Less operating expenses: ($88,200)
• Less bonus depreciation: ($217,600)
• Net tax loss: ($230,800)

Tax Savings (at 54.1% combined rate):

• Federal (37% + 3.8%): $94,146
• California (13.3%): $30,696
• Total Year 1 tax savings: ~$125,000

5-Year Projection

Year	Rental Income	Operating Expenses	Depreciation	Net Loss	Tax Savings
1	$75,000	$88,200	$217,600	($230,800)	$124,862
2	$80,000	$90,000	$11,859	($21,859)	$11,826
3	$85,000	$92,000	$11,859	($18,859)	$10,203
4	$90,000	$94,000	$11,859	($15,859)	$8,580
5	$95,000	$96,000	$11,859	($12,859)	$6,957convergence

5-Year Total Tax Savings: ~$162,000+

Return Analysis

• Cash invested: $212,500 (down payment) + ~$25,000 (closing costs, furnishing) = ~$237,500
• Year 1 tax savings: ~$125,000
• Year 1 “payback”: 53% of initial investment recovered through tax savings alone

This doesn’t include any property appreciation, principal paydown, or positive cash flow in later years.

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Case Study 2: Dual-Physician Household

Profile

• Taxpayers: Two physicians (hospitalist and radiologist)
• Combined W-2 Income: $750,000
• Filing Status: Married filing jointly
• State: Texas (no state income tax)
• Strategy: Non-working spouse handles material participation

The Situation

Both physicians work demanding schedules (50-60 hours/week each). Neither can come close to meeting REPS requirements or spending 500 hours on real estate. However, one spouse is transitioning to part-time work to raise children and can dedicate time to STR management.

The Investment

• Property: Beach condo in Gulf Shores, Alabama
• Purchase Price: $650,000
• Depreciable Basis: $520,000
• Cost Segregation: $135,000 in accelerated property (26%)

Material Participation Approach

The part-time-working spouse handles all STR operations:

• Guest communications and reviews
• Cleaning coordination (works with local cleaner)
• Pricing optimization and calendar management
• Quarterly property visits for maintenance oversight
• Bookkeeping and expense tracking

Time log shows 520 hours in Year 1—meeting the 500-hour test.

Comparison: With vs. Without STR Strategy

Scenario	Tax Treatment	Loss Deductible?	Year 1 Tax Savings
Traditional LTR	Passive	No (above $150K AGI)	$0
STR with Material Participation	Non-passive	Yes, against W-2	~$58,000

The STR strategy generates $58,000 in Year 1 tax savings that would be completely unavailable with a traditional rental approach.

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Implementation Roadmap

Ready to implement this strategy? Here’s your step-by-step guide.

Phase 1: Pre-Purchase (4-8 Weeks)

1. Consult a specialized CPA: Find a CPA who specifically works with real estate investors and understands STR taxation. They’ll run projections based on your tax situation.

2. Analyze your time availability: Can you or your spouse realistically commit 500+ hours annually? Be honest—underestimating time requirements is a common mistake.

3. Research markets: Look for vacation destinations with:

   • Strong STR demand (beach, mountains, tourist attractions)
   • Average stays under 7 days
   • Favorable local regulations
   • Reasonable property prices relative to rental income

4. Get financing pre-approval: Traditional lenders often struggle with STR income documentation. DSCR (Debt Service Coverage Ratio) lenders like Griffin Funding or Angel Oak Mortgage qualify you based on the property’s projected rental income rather than your W-2. Kiavi offers competitive rates starting around 7.25% with 80% LTV. New Silver is a direct lender that also offers bridge and construction loans if you’re considering value-add plays.

Phase 2: Acquisition (2-4 Weeks)

5. Property selection: Prioritize properties where short stays are natural (vacation rentals, not urban apartments that attract monthly renters).

6. Entity structure: Most investors hold STRs:

   • Personally: Simplest; losses flow directly to Form 1040
   • Single-member LLC: Asset protection; disregarded for tax purposes (same as personal)
   • Partnership/S-Corp: More complex; consult your CPA

7. Order cost segregation study: Contact a provider before closing. Many can complete studies within 2-3 weeks of property access.

Phase 3: Property Setup (2-6 Weeks)

8. Furnish the property: All furnishing costs qualify for bonus depreciation. Services like Minoan provide trade pricing on furniture and can handle entire property setups. Turnkey Vacation Rentals offers complete furnishing packages designed specifically for STRs.

9. Set up operations: Install smart locks, security cameras, and property management software. OwnerRez offers the most comprehensive feature set with direct API connections to Airbnb and VRBO—it automatically logs your activities and generates reports useful for time tracking and audit defense. Hospitable excels at automated guest messaging with transparent flat-tier pricing. Guesty provides enterprise-level features for those planning to scale to multiple properties.

10. Obtain insurance: Standard homeowner’s insurance typically excludes commercial STR activity. Proper Insurance offers STR-specific policies that cover gaps in Airbnb Host Protection. Safely bundles guest screening with damage protection.

Phase 4: Operations (Ongoing)

11. Start time tracking immediately: Use a dedicated time tracking app, calendar, or spreadsheet. Log activities daily—don’t try to reconstruct hours at year-end.

12. Document everything: Save emails, text messages, receipts, photos, and notes. This documentation is your audit defense.

13. Track all expenses: Tools like Stessa (free basic tier) automatically categorize transactions and generate Schedule E reports. REI Hub is purpose-built for rental property accounting and integrates with property management software. Baselane combines banking and bookkeeping in one platform built specifically for landlords.

Phase 5: Tax Filing

14. Key forms:

• Schedule E: Report rental income and expenses
• Form 4562: Depreciation and amortization (including bonus depreciation)
• Form 8582: Passive activity loss limitations (to show losses are non-passive)
• Potentially Schedule C: If structured as a business

15. Maintain documentation: Keep your time logs, cost segregation study, and all supporting documents for at least 7 years.

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Comparison: STR Loophole vs. Real Estate Professional Status

Requirement	STR Loophole	REPS
Time Requirement	500 hours in STR activity	750+ hours in real property trades/businesses
% of Working Time	No requirement	Must be >50% of all working time
Feasible for W-2 Earners?	Yes (especially with spouse)	Rarely (need to work part-time or less)
Property Type	Vacation/short-term rentals only	Any rental real estate
Average Stay Requirement	≤7 days (or ≤30 days with services)	No requirement
Documentation Burden	Moderate (time logs, 7-day average)	High (detailed time logs, comparative analysis)
Audit Risk	Moderate	Higher (IRS actively scrutinizes REPS claims)

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Critical Risks and Considerations

This strategy is powerful but not without risks. Understand these before proceeding.

1. IRS Audit Risk

The IRS is aware of the STR strategy and has increased scrutiny. Your best defense:

• Contemporaneous time logs: Track hours as you work, not at year-end
• Proof of 7-day average: Keep booking records showing average stay length
• Cost segregation from reputable firm: Ensure your study is defensible
• Professional tax preparation: Work with a CPA experienced in this area

2. Depreciation Recapture

When you sell the property, you’ll owe depreciation recapture tax at a maximum 25% rate (Section 1250) on all depreciation taken. This includes bonus depreciation.

If you took $200,000 in depreciation and later sell, you’ll owe up to $50,000 in recapture tax (plus capital gains on any appreciation). This isn’t a reason to avoid the strategy—the time value of money still favors taking deductions now—but plan for it.

Mitigation strategies:

• 1031 exchange to defer recapture
• Hold until death (heirs receive stepped-up basis)
• Plan for recapture tax in your sale calculations

3. Vacation Home Rules

If you use the property personally for more than the greater of:

• 14 days, OR
• 10% of rental days

…then IRC Section 280A imposes significant limitations on deductions. Keep personal use minimal and carefully documented. Having friends and family stay “free” counts as personal use unless they pay fair market rent.

4. Local Regulations

Many municipalities are restricting or banning short-term rentals:

• Permit requirements
• Occupancy taxes
• Primary residence requirements
• Outright bans in certain zones

Research local regulations thoroughly before purchasing. A property that can’t legally operate as an STR destroys the entire strategy.

5. Market and Cash Flow Risk

This strategy works even if your property operates at a cash flow loss—the tax benefits can still generate positive after-tax returns. However:

• STR income is not guaranteed
• Oversupply in some markets has compressed rates
• Economic downturns reduce travel demand
• Platform policies can change

Don’t acquire property solely for tax benefits. Ensure the investment makes sense as real estate, with tax benefits as an enhancement.

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Common Mistakes to Avoid

Learn from others’ errors:

1. Failing to Track Hours Contemporaneously

The IRS expects logs created in real-time, not reconstructed at tax time. Use a dedicated app or calendar and log activities as you complete them.

2. Excessive Personal Use

Staying at your vacation rental is tempting, but exceeding the 14-day/10% threshold jeopardizes your deductions. Treat it as a business asset.

3. Not Meeting the 7-Day Average

If your average stay creeps above 7 days, you lose the STR classification. Monthly rentals during off-season can destroy your annual average. Run the numbers regularly.

4. Hiring a Property Manager Who Works More Hours Than You

If a property manager handles most operations, you may fail the “more than any other individual” test. You can use cleaners and contractors, but maintain control of core management activities and track your hours diligently.

5. Forgetting State Tax Implications

State tax treatment may differ from federal. Some states don’t conform to federal bonus depreciation rules. Consult a CPA familiar with your state’s tax code.

6. Not Planning for Depreciation Recapture

The tax savings are real, but so is the recapture. Factor this into your long-term investment plan and consider exit strategies like 1031 exchanges.

7. Ignoring At-Risk Rules

IRC Section 465 at-risk rules limit losses to your amount “at risk” in the activity. Non-recourse financing and certain arrangements can trigger limitations. Your CPA should analyze this.

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When This Strategy Makes Sense (and When It Doesn’t)

Good Candidates

• High W-2 income ($300K+) with limited deductions and high marginal tax rates
• Willingness to actively manage the property or closely oversee operations
• Available spouse who can dedicate time to STR management
• Interest in real estate as a long-term wealth-building strategy
• Markets with strong STR demand and favorable regulations
• Ability to document 500+ hours annually

Poor Candidates

• Those wanting truly passive income: This strategy requires active involvement
• Unable to document 500+ hours: Without material participation, losses are passive
• Markets with STR restrictions: Regulations can eliminate the opportunity entirely
• Uncomfortable with real estate risk: This is still real estate investing with all attendant risks
• Limited time and no spouse availability: Material participation requires meaningful time commitment
• Overextended financially: Don’t buy property you can’t afford without the tax benefits

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Frequently Asked Questions

Can I use a property manager and still qualify?

Yes, but carefully. You can hire cleaners, handymen, and contractors. However, if a property manager handles core management functions and works more hours than you, you may fail the material participation tests. Maintain control of guest communication, pricing, marketing, and management decisions. Track your hours meticulously.

What if my average stay is exactly 7 days?

The rule requires stays of 7 days or less. An average of exactly 7.0 days meets the requirement. However, aim for well under 7 days to provide a buffer and reduce audit risk.

Do I need to meet material participation every year?

Yes. Material participation is tested annually. If you fail to meet the tests in a given year, that year’s losses become passive. Previous years’ non-passive treatment isn’t affected.

Can I aggregate multiple STR properties?

Yes, you can elect to aggregate multiple STR activities into a single activity for material participation purposes. This is helpful if you have several properties—your hours across all properties combine. Make the election on Form 1065 or your individual return.

What about the Net Investment Income Tax (NIIT)?

Income from STRs where you materially participate is generally exempt from the 3.8% NIIT. This is an additional benefit—not only can losses offset W-2 income, but profits (when they occur) avoid NIIT.

Is this strategy legal?

Absolutely. The 7-day rule and material participation rules are established in IRS regulations dating back decades. Thousands of taxpayers use this strategy, and it’s been affirmed in Tax Court cases. However, proper documentation and compliance are essential.

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Next Steps

The short-term rental tax strategy represents one of the most powerful legal tax reduction strategies available to high-income W-2 earners. By combining the 7-day rule, material participation, cost segregation, and bonus depreciation, you can generate substantial non-passive losses that directly offset your ordinary income.

However, this strategy requires:

• Active involvement (500+ hours annually)
• Meticulous documentation
• The right property in the right market
• Professional guidance from a qualified CPA

If those requirements fit your situation, the potential tax savings—often $50,000-$150,000+ in Year 1 alone—make this strategy worth serious consideration.

Recommended Next Steps:

1. Calculate your potential savings: Use your current income, marginal rate, and expected property basis to estimate Year 1 benefits.

2. Find a specialized CPA: Look for a CPA who specifically works with real estate investors and STR taxation. They should be familiar with cost segregation, bonus depreciation, and material participation rules.

3. Research target markets: Identify vacation destinations with strong STR demand, favorable regulations, and properties that fit your budget.

4. Model the investment: Project cash flows, tax benefits, and returns over a 5-10 year hold period.

5. Consider your time availability: Honestly assess whether you or your spouse can commit 500+ hours annually.

The strategy isn’t for everyone—but for the right high earner with the right property and commitment level, it can fundamentally change your tax situation.

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Additional Resources

IRS Publications

• IRS Publication 925: Passive Activity and At-Risk Rules
• IRS Publication 527: Residential Rental Property
• IRS Publication 946: How to Depreciate Property

Relevant Tax Code Sections

• IRC Section 469: Passive Activity Losses
• IRC Section 280A: Vacation Home Rules
• IRC Section 168: Accelerated Depreciation

Tools and Software

Property Management

• OwnerRez - Comprehensive features, direct API to Airbnb/VRBO
• Hospitable - Best for automated guest messaging
• Guesty - Enterprise-level for scaling

Accounting

• Stessa - Free basic tier, Schedule E reports
• REI Hub - Purpose-built for rentals
• Baselane - Banking + bookkeeping combined

Cost Segregation

• KBKG - Free feasibility analysis
• Madison SPECS - Remote study option
• RE Cost Seg - Individual investor focused

Lending

• Griffin Funding - DSCR loans, all 50 states
• Angel Oak Mortgage - STR-friendly
• Kiavi - Competitive rates
• New Silver - Bridge/construction loans

Insurance

• Proper Insurance - STR-specific policies
• Safely - Guest screening + damage protection

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This article is for educational purposes only and does not constitute tax, legal, or financial advice. Tax laws are complex, change frequently, and vary by jurisdiction. The strategies discussed may not be appropriate for your specific situation. Always consult with qualified tax, legal, and financial professionals before implementing any tax strategy or making investment decisions.