Bonus depreciation on ADU (REPS status)

[Jessica Yoo]

Hello, We are new investors and would love your input. We bought a duplex with a sizable garage/hobby space that we would like to convert into an ADU. We are trying to get everything done this year so that we can still qualify for the 80% bonus depreciation before it drops down to 60% in 2024. The question is this- in the event we cannot finish the work in time and cannot place the unit in service this year, it's clear that financially we would just have to stomach the 60% bonus depreciation... but what about the hours worked? Do those still apply to the 2023 REPS total? Or do those also carryover to count towards 2024?? It seems odd that hours worked in 2023 would count towards 2024, but then it also seems odd that hours would count in 2023 but all financial benefit would be counted towards 2024?? Thanks for your help!