Cost Segregation & mild rehab - same tax year

[Lucas Ayers]

Greetings,

Can I purchase a property, get a cost segregation done & then do a mild rehab and replace some of the 5-year items in the cost segregation and get BONUS depreciation on both the old and new? 

this is all on a short-term rental:

example (round #s to make it easy):  

2/1/2022 Purchase date price 450K

2/10/2022 - Cost segregation done - 50K is land so excluded from cost-seg,  400K is improvements to be segregated

cost seg results (simplified):

300K = 27.5 year property

100K = 5 year property (10K appliances, 10K carpeting, 20K cabinets, 10K countertops......) -  which is eligible for "100% bonus depreciation"

Then in between STR guests we replace the following items that were part of the Cost-Seg that was done at purchase:

3/1 - Appliances - 5K for new

4/1 - replace carpet with floating vinyl planks - 5K

8/1 - replace countertops - 5K

On the 2022 Taxes can you get bonus depreciation on BOTH the 10K from the purchase price that was allotted to "Appliances" in the Cost Seg & the 5K I spend on NEW appliances to replace them just 1 month later?    Or would it be better to wait 1 tax year to do those "replacements"?  Or can we just add the replacements cost to the 400K in improvements for the cost-seg - so that cost-seg would be done on 415K instead of 400K   (400k in improvements from purchase price + 15K in replacements items)

[Bonnie Griffin Kaake]

@Lucas Ayers As @Julio Gonzalez said, it is recommended doing the cost seg prior to rehab. Of course, some items will need to be done to get an occupant in the first year. Some of those may be expensed items or items that will need to be included in the cost seg. The advantage of doing the study in the first year and renovation later is that you can use what is call Partial Asset Disposition in the second calendar year after purchase to reduce your taxes. This is complex and you will need a good RE knowledgeable CPA and partner with a "quality" cost segregation company to get the advice you need to maximize your tax benefits and cash flow. BTW, ALL STRs have to be depreciated over 39 years, not 27.5.