Cost Segregation Study for STR

[Brad Gibson]

Howdy everyone. I'm considering the purchase of a small home in Western Washington as a STR. One of the intriguing things about adding this home to our portfolio would be the potential tax benefits of doing a cost segregation study and receiving the 80% bonus depreciation this tax year. What I'm not clear on is approximately how much an average cost segregation study will show as available for that immediate depreciation.

Here are the numbers:

Sale Price $300,000 

Value of the land per the county assessor: $9.000.

Value of the structure including fixtures and contents: $291,000

Current tax bracket: 32%

The wifey and I both have high paying W-2 jobs and it would be nice to count that depreciation against her or my salary.  I know the rules for ensuring that the "loss" counts against W-2 income in a short term rental.

Is the standard estimate about 25% of the structure and contents what would be yielded as an immediate depreciation based upon a cost segregation study.  I'm also aware that in 2023, only 80% can be bonus depreciated.

Thanks in advance for the insight.

[Anna Torba]

Quote from @Melissa Nash:

This is the BEST STR loophole. I did a cost seg about $1500 cost and got a $300k depreciation from 1 property! Do you have a good CPA to advise you on how it can work for you? You need to be ACTIVELY managing the property to qualify.

 Can you recommend your cPA or did you do it yourself. I have the report and want to do it on turbo tax.